Criterion referenced tests are defined and distinguished from norm-referenced tests. Applications of criterion-referenced tests in schools, for either assessment or instructional management, is then considered. Procedures for converting norm-referenced tests to criterion referenced, setting "cut-off" scores, and using global test information to make inferences about specific competencies, are suggested. Steps for developing new criterion-referenced assessment tests are discussed. These steps include identifying the audience for the assessment, setting overall and priority objectives, deciding on methods of reporting test results, and reflecting the educational objectives of the school in the test items. A flowchart of a criterion-referenced testing system for a school or school district is included. A flexible criterion-referenced testing system, based on this flowchart, is suggested for continuing instructional management. This system would be controlled by the teacher, but with a continuing work team within the school or school system to design and carry out the steps.