This sounds a lot like the Florida FCAT, which in my mind is a disaster. This concept looks great on paper, but there are some flaws with it.
1. Students on every level have bad days. There are times they don't feel good, didn't get enough sleep, or for some reason don't perform up to par. It would really suck if a good student got retained because they had a bad day.
2. How would any of us feel, if our promotion at work was determined solely on one day or one week? That would be a lot of pressure. I don't think students, who already have enough pressure, need more.
3. Teachers begin to teach the test, and don't look for more creative teaching methods. I taught in private school, and when a new parent would come in from the public school that was the main complaint. You will have some that won't of course, but a lot of teachers will feel like they have to focus on the test.
4. Some students just don't test well. I knew a girl in high school, who was one of our five valedictorians, and was very smart. She just didn't test well. She never got over an 18 on her ACTs. (She's now a doctor, and I think she was a Chi-O). How unfair is it to someone who just doesn't test well.
While it's important to measure proficiency, I think it would be better done by training our teachers better. It would also be valuable to have teachers put together portfolios of each student's work over the year, and have someone in the administration review it, so they can see the progression of the student. Then they could make a joint decision on each student. This would take some of the "teacher's pet" and the "passing just to get them out of here" out of the equation. Would this take time and money, of course. Students today are already going to school in an over processed environment, where very little is customized to meet each students individual need because of lack of time and resources... Why add to that?
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