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I would prefer they grouped by subject and need
Agreed! Kiddos can easily have different readiness/ability in different areas.

Flexible cluster grouping by readiness and ability, in each subject area, across grade levels, and without regard to chronological age, may make it logistically easier for educators to teach, while learners benefit from receiving an appropriate challenge with their peers.

Results from tests such as MAP (Measures of Academic Progress) could be utilized as a datapoint in creating flexible cluster groups.

Within each flexible cluster grouping, differentiation may be effective.