n a major victory for disability rights groups, the Educational Testing Service announced yesterday that on many of its standardized exams it would stop flagging the results of students with physical or learning disabilities who receive special accommodations, like extra time, for the tests.

The new policy, covering the Graduate Record Examination, the Graduate Management Admission Test, the Test of English as a Foreign Language and Praxis, a test for teachers, will go into effect in October. More than two million students take those tests each year, and thousands receive accommodations for disabilities.

The announcement is part of the settlement of a lawsuit filed two years ago by a California man with no hands who was granted extra time and the use of a computer with a trackball for taking the management test.

It does not cover the tests given for medical or law school. Nor does it cover the SAT, which is also administered by Educational Testing Service but owned by the College Board, an independent entity not named in the lawsuit. Nonetheless, the settlement includes an agreement that the College Board will convene a group to re-examine its flagging policy and recommend by March 31, 2002, whether it should be continued, changed, or ended.

"This is a huge, major step forward for equal opportunity in testing," said Robert Schaeffer, the public education director of FairTest, a Cambridge, Mass., group that is critical of standardized testing. "The pressure now is on the College Board to do the same for the SAT, since it's untenable to have one policy for the graduate-school admission test and a completely different one for the SAT."

For decades, students granted extra time or other accommodations on the standardized tests had their results flagged with the notation "Scores Obtained Under Special Conditions."

When the plaintiff in the California suit, Mark Breimhorst, was rejected from the business schools to which he applied, he filed his suit charging that the testing service's flagging policy violated state and federal anti- discrimination laws, stigmatizing disabled students with a kind of scarlet letter.

The International Dyslexia Association and Californians for Disability Rights joined his suit.

The testing service initially moved to dismiss Mr. Breimhorst's lawsuit, but last year, Judge William Orrick of Federal District refused to do so, ruling that the service's exams should "equally measure the skills of disabled and nondisabled test-takers" — and that, if they did so, there would be no reason to flag the scores of test-takers who received accommodations.

In settling the case, the testing service did not admit any violation of the law.

"Having carefully weighed the expressed concerns of people with disabilities," said Kurt Landgraf, the president of the testing service, "we decided, in the spirit of furthering opportunity, to end flagging" for the tests.

David Wilson, president of the Graduate Management Admission Council, said yesterday that business school admissions officers seemed comfortable with the settlement.

"The people I've talked to say that if that's what the applicants want, so be it," Mr. Wilson said. "The unfortunate thing is, most of them thought it was beneficial for applicants to have that flag, because when admissions officers looked at the applicant's experience, and saw that a person had achieved all that despite a disability, it usually had a positive effect."

Although Mr. Breimhorst had a physical disability, the largest, fastest-growing and most controversial group of students with disabilities — accounting for 9 out of every 10 accommodation granted — are those with attention deficit disorder or a learning disability like dyslexia.

Over the last decade, the number of students diagnosed with such disabilities, and requesting special accommodations, has mushroomed.

At the same time, there has been increasing concern that affluent white students receive accommodations on their standardized tests far more often than poor black or Hispanic students. Last year, for example, the California state auditor found that, among the state's 1999 high school graduates, students in private schools were four times more likely than students in public schools to have received accommodations on the SAT.

Whether for physical or learning disabilities, almost all the accommodations include extended time. But there is little solid data on how much extra time disabled students need to fairly show their skills.

With ever-more competitive college admissions, and more high- stakes testing, the debate over accommodating disabled students has heated up. And with increasing awareness of the federal anti-discrimination laws, students with disabilities have become more litigious about their right to receive accommodations on everything from bar exams and medical-school admission tests to the yearly state assessment tests.

"Our settlement doesn't cover every standardized test," said Joshua Konecky, the lawyer at Disability Rights Advocates in Oakland, Calif., who represented Mr. Breimhorst, "but E.T.S. is so important in the field that we are hoping other groups, like the one that administers the medical school test, will look and see that if E.T.S. can administer tests without flags, they can, too."

The SAT is the test for which the most accommodations are granted: nearly 50,000 tests will be administered under special conditions this year, compared with about 17,000 in 1990-91. About two million students applying for college take the SAT each year.

As part of the settlement, the College Board has agreed to have a panel of experts on testing, university admissions and disabilities examine the practice of flagging, and make recommendations on whether it should be continued, changed or ended.

"There are good reasons for flagging," said Gaston Caperton, president of the College Board, who is himself dyslexic, "and we are pleased that the merits will be weighed by an expert panel."

Chiara Coletti, the spokeswoman for the board, said there was a consensus among the colleges and universities on the board that accommodations and flagging warrant re-examination.

Among other things, the experts will consider the extent to which extended time affects the comparability of scores between people with disabilities and people without them.

"One easy way to end the whole problem would be to give everyone more time on the test, like four and half hours instead of three, or to remove enough questions, so that reading speed is no longer an issue," said Mr. Konecky of the Disability Rights Advocates. "If you don't have time restraints, you don't have the problem with accommodations. I expect that will be on the table."

Under the terms of the settlement, Mr. Konecky can take the issue back to court before the same judge if the disability groups he represents do not accept the panel's recommendations.

Questions:

1. Suppose there is an optimal amount of accommodation (from the viewpoint of society as a whole) for disabled individuals taking tests.  Present an argument that the actual amount of accommodation for disabled individuals that results from the efforts of various individuals and groups will be more than this "optimal."  Are there other forces that tend to reduce the amount of accommodation? 
2. Compare this situation to a situation in corporate governance.  (Don't forget the meaning of governance!)