Chicago Public Schools, spending more than its $1.5 billion a year budget, has defined its first obligation as producing graduates who can read well. This study assesses how well the school system is succeeding by examining roughly 39,500 students who were ninth graders in fall 1980 and should have graduated in spring 1984. Statistics were used to chart students' progress over 4 years as some dropped out or transferred to other school systems and others graduated with either very good or marginal reading skills. While results graphically depict the system's successes and failures, the study's main priority is using the information to develop improvement plans for Chicago schools. The study investigates (1) the percentage of 1980-81 ninth graders who graduated from high school; (2) the percentage of these students who also could read at average or above average levels; and (3) how the high school completion rate and the percent of well-prepared (reading) graduates differ among Chicago's 62 4-year high schools. The remainder of the report explains research methods, presents results, and explains policy implications and reform recommendations. Compared to a national high school completion rate of 73 percent, Chicago's rate is 47 percent. Whereas the national pecentage for well-prepared graduates is 36 percent, the Chicago rate is 15 percent. These results are shocking. Schools in the majority of Chicago neighborhoods are abject failures or viewed as dumping grounds for uneducable children. A "Quality Schools Agenda" is advised to overcome four key barriers to reforming Chicago's schools. Included are numerous tables and 12 references. (MLH)