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A-F school letter grade systems, currently used in 13 states across the United States (U.S.), are required by federal policy to help states define and label school quality every year along a grade A-F grading or labeling system. In this study, we explored the extent to which such grades assigned based on objective school measures including schools’ students’ achievement test scores, may reflect school demographics and other, non-achievement-based school indicators. We found that such bias does exist, thwarting the validity of the inferences to be drawn from states’ A-F grade system output, which is critically more important when consequential decisions (e.g., school funding decisions) are attached to A-F grade output.