This report describes the status of public education in Texas, as required by Texas law. It contains an executive summary and 14 chapters on the following topics: (1) state performance on the academic-excellence indicators; (2) a summary compilation of overall student performance on the state performance assessments and a study of the correlation of course grades with state assessments; (3) a summary report on students in alternative-education settings; (4) a summary compilation of overall performance of students at risk of dropping out of school; (5) student dropouts, including profiles and dropout rates; (6) grade-level retention of students; (7) district and campus performance in meeting state accountability standards; (8) status of the curriculum; (9) waivers and deregulations; (10) administrative cost ratios of school districts; (11) district reporting requirements; (12) funds and expenditures of the Texas Education Agency; (13) a comparison of open-enrollment charter schools and school districts on the academic-excellence indicators, accountability measures, and student performance; and (14) a status report on character-education programs. Overall, student performance increased over the previous year, and students in school districts outperformed students in charter schools. (Contains numerous graphs, charts, and tables.) (Author/WFA)