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A cluster of public school districts in New Hampshire is radically redefining testing and accountability in a first-of-its-kind pilot project approved Thursday by the US Department of Education.

The pilot, called Performance Assessment for Competency Education (PACE), uses locally designed measures of student learning as a replacement for some statewide standardized testing. These assessments require students to apply what they鈥檝e learned in multiple steps and tasks. Fourth-graders, for instance, might design a new park, calculate the cost of creating it, and write a letter to persuade town leaders to build it.

At a time when cries of 鈥渙vertesting鈥� from parents and teachers are growing louder across the nation, and when Congress is working to rewrite the federal education law known as No Child Left Behind, the experiment will be watched closely.

鈥淚t fits into a much bigger conversation about ... how we can create a humane assessment system that鈥檚 useful to teachers but also useful to states and the federal government for holding schools accountable,鈥� says Julia Freeland, a research fellow at the Clayton Christensen Institute for Disruptive Innovation, based in San Mateo, Calif.

New Hampshire has been transitioning statewide to 鈥�competency-based learning," in which students are expected to master key concepts in each subject rather than just put in the seat time and get a minimal passing grade.

Now, four leading districts in that shift 鈥� Sanborn Regional, Souhegan, Rochester, and Epping 鈥� are rolling out PACE. Instead of taking federally mandated statewide tests in math and English language arts in Grades 3-8, students in these districts will take them just once in elementary school and once in middle school. As in other districts statewide, they will also take the tests in 11th grade.

In the years they forgo the statewide tests, the districts will use common performance assessments in math, language arts, and science that teachers and administrators have developed together, vetted by the state. Teachers will also give various types of assessments throughout the school year to ensure students are on track. These could include tests that look more traditional, but they won鈥檛 have to be the same across all four districts.

With this hybrid model, the occasional state testing becomes more of an 鈥渁udit, which is a really appropriate role of a state assessment system,鈥� says Scott Marion, associate director of the National Center for the Improvement of Educational Assessment in Dover, N.H. This way, teachers can get information that improves their teaching, and the state verifies that they aren鈥檛 wildly off base when they say their assessments show student proficiency.

PACE is causing excitement because it represents a 鈥渂reakthrough鈥� in two ways, Ms. Freeland says. First is the fact that the US Department of Education is allowing locally designed assessments to be part of the accountability system: 鈥淭hat鈥檚 just never happened before,鈥� she says. Second, it鈥檚 a testing innovation that鈥檚 鈥減ushing the boundaries beyond multiple choice.鈥�

Many states that have adopted the Common Core State Standards are using one of two testing systems developed to align with Common Core. These testing systems were supposed to offer far more complex, task-based assessments, but they haven鈥檛 delivered as much innovation as originally promised, says Bob Schaeffer, public education director of the Boston-based National Center for Fair and Open Testing (FairTest).

New Hampshire is part of the Smarter Balanced Assessment Consortium. PARCC is the other testing system.

Not only does the PACE pilot 鈥渞educe the level of testing, which has reached a level of insanity,鈥� says Mr. Schaeffer, but it shifts toward 鈥渂etter measures of what students know and can do.鈥� It 鈥渋s a potentially significant crack in the wall of government-mandated standardized testing, not just for New Hampshire, but nationally,鈥� he says.

One of the most promising aspects of the pilot is how it has paid attention to research on developing 鈥渋ntrinsic motivation in learners,鈥� says Kim Carter, executive director of the Q.E.D. Foundation, a nonprofit in Amherst, N.H., that supports competency-based education. 鈥淭hat鈥檚 an outcome we have to have.鈥�

This approach to testing also signals a respect for educators. 鈥淥ur teachers are ecstatic about the idea that somebody鈥檚 finally listening to what they鈥檝e been saying all along: Don鈥檛 measure me or my school on a test that鈥檚 disconnected from what happens in the classroom,鈥� says Brian Stack, principal of Sanborn Regional High School in Kingston, N.H.

Even if the pilot hadn鈥檛 been approved, his school would still be doing performance-based assessments, because 鈥渢hat鈥檚 what makes our model work,鈥� he says of the competency-based system that鈥檚 been five years in the making.

New Hampshire hopes to slowly scale up the experiment. There are other districts waiting in the wings to switch to the performance-based assessments as early as next year, Mr. Marion says. He鈥檚 also aware of a handful of states eager to move in this direction, though he wonders if they might get 鈥渟kittish鈥� when they find out how much work it鈥檚 taken to develop and vet the new assessments.

Everyone he鈥檚 talked with says the work is worth it because 鈥渋t鈥檚 the right work,鈥� Marion says. 鈥淭hey see the direct relationship to improvement in teaching.鈥�