A reader involved in these issues forwarded this article by Kevin Carey: Hot Air: How States Inflate Their Educational Progress Under NCLB [Full Report: 180K PDF]

Critics on both the Left and the Right have charged that the No Child Left Behind Act tramples states’ rights by imposing a federally mandated, one-size-fits-all accountability system on the nation’s diverse states and schools.
In truth, No Child Left Behind (NCLB) gives states wide discretion to define what students must learn, how that knowledge should be tested, and what test scores constitute “proficiency”—the key elements of any educational accountability system. States also set standards for high school graduation rates, teacher qualifications, school safety and many other aspects of school performance. As a result, states are largely free to define the terms of their own educational success.
The Pangloss Index ranks Wisconsin as the most optimistic state in the nation. Wisconsin scores well on some educational measures, like the SAT, but lags behind in others, such as achievement gaps for minority students. But according to the Wisconsin Department of Public Instruction, the state is a modern-day educational utopia where a large majority of students meet academic standards, high school graduation rates are high, every school is safe and nearly all teachers are highly qualified. School districts around the nation are struggling to make Adequate Yearly Progress (AYP), the primary standard of school and district success under NCLB. Yet 99.8 percent of Wisconsin districts—425 out of 426—made AYP in 2004–05.
How is that possible? As Table 2 shows, some states have identified the large majority of districts as not making AYP. The answer lies with the way Wisconsin has chosen to define the AYP standard.
NCLB requires states to base AYP designations on the percentage of students who score at the “proficient” level on state tests in reading and math. That percentage is compared to a target percentage, which must be met by both the student body as a whole and by “subgroups” of students, such as students from specific racial and ethnic populations. Districts that fail to make AYP for multiple consecutive years become subject to increasingly serious consequences and interventions.
Wisconsin has a relatively homogenous racial makeup and many small school districts, resulting in fewer subgroups in each district that could potentially miss the proficiency targets. But Wisconsin’s remarkable district success rate is mostly a function of the way it has used its flexibility under NCLB to manipulate the statistical underpinnings of the AYP formula.

Bold added. Also via eduwonk.
Kevin Carey comments on a Indiana newspaper’s editorial coverage of this issue:

Then comes the final pox-on-both-their-houses flourish, “what does any of it, really….” Maybe there are people out there who really don’t think that reporting accurate public information about the success of the school system has anything to do with the success of the school system. I just didn’t expect to find newspapers among their number.