The following is pulled directly from the US News and World Report:
Step 1: The first step determined whether each school's students were performing better than statistically expected for students in their state.
We started by looking at reading and math results for all students on each state's high school proficiency tests. We then factored in the percentages of economically disadvantaged students – who tend to score lower – enrolled at the schools to identify schools performing much better than statistical expectations.
U.S. News made one important methodology change to Step 1 in the 2015 rankings compared with previous editions of the rankings. We lowered the performance threshold necessary for a school to pass Step 1. To qualify for the rankings published from 2012 to 2014, schools had to meet a performance threshold of one-half of one standard deviation above the average. For this year's rankings, schools only had to reach one-third of one standard deviation above the average.
This slightly lower threshold was applied to a school's performance compared with what would be statistically expected for that school, based on its percentage of economically disadvantaged students. The change meant that a larger percentage of high schools passed Step 1 in 2015 than in last year's rankings, and it resulted in hundreds more high schools winning medals. In the 2015 rankings, approximately one-third of eligible high schools earned a medal, compared with around one-fourth of those eligible in 2014.
Even with the lower threshold, schools still had to perform better than average to win a medal. One key reason for implementing this change is to reduce year-to-year volatility in the rankings, so fewer high-performing schools drop out of the rankings over small changes in their performance on state assessments.
• Step 2: For schools passing this first step, the second step assessed whether their disadvantaged students – black, Hispanic and low-income – were outperforming disadvantaged students in the state.
We compared each school's math and reading proficiency rates for disadvantaged students with the statewide results for these student groups and then selected schools that were performing better than their state averages.
• Step 3: Schools that made it through the first two steps became eligible to be judged nationally on the final step – college-readiness performance – using Advanced Placement or International Baccalaureate test data as the benchmarks for success, depending on which program was largest at the school