How Principals Decide Which Students With Disability Sit Standardised Tests and the Implications for School Accountability^*

Whether students with disability should be included in standardised testing is a contentious issue. In this study, we provide the first empirical evidence on what happens when principals are given discretion over exempting students with disability. Using population administrative data of children with teacher‐identified low‐moderate disability, we find evidence of widespread exempting in their first national test (at 8–9 years old). Those who receive special education funding, a visible flag of disability, are 30 percentage points less likely to sit, controlling for teacher‐assessed student capabilities. We find no evidence that that the rate of indiscriminate exempting is linked to school competition, but find instead that it is linked to the presence of learning impediments. While not impacting overall school accountability, such behaviour potentially compromises accountability for special education programs and sends a bad signal to students with learning impairments.