This report compares North Carolina's reading and mathematics performance on the most recent administrations of the state assessment with performance on the National Assessment of Educational Progress (NAEP). To indicate how North Carolina is doing in narrowing the academic achievement gap between African American and Latino students and their white, middle class peers, the report presents NAEP data by race/ethnicity. The report presents other state-level data on K-college education, including demographic distribution across each educational level, participation and success in Advanced Placement, percentage of students taking high-level courses, school funding gaps, and high school and college graduation rates. In 2001-2002, 77 percent of all 4th graders were at or above Level III in reading. Significantly more white than black 4th graders were at or above Level III. On the 1998 NAEP 4th grade reading assessment, 62 percent of students performed at the basic level or above, while 28 percent performed at the proficient level or above. In 2001-2002, 82 percent of all 8th graders were at or above Level III in mathematics. Significantly more white than black 8th graders were at Level III or above. Results from the 2000 NAEP 8th grade mathematics assessment show that 70 percent of students were at or above the basic level, while 30 percent were proficient or above. North Carolina had the 10th smallest African American-white 4th grade reading achievement gap in 1998. In 2000, the African American-white 8th grade mathematics achievement gap was 18th among the states. African American students are underrepresented in Advanced Placement (AP) test taking and in gifted and talented programs. Asian American students have a high rate of AP test taking. Nearly 40 percent of North Carolina's high school students enroll in college, compared to 54 percent nationwide. Native Americans graduate from the state college at a lower rate than students from other groups. Nearly one in five secondary classes are taught by teachers lacking a major or minor in the field. Districts with higher child poverty rates and higher minority enrollments have the fewest state and local dollars to spend per student. (SM)