Ouch. My guess is that they don't give much thought to the testing year or cohort at all- I would guess they have x spots in the program and fill the spots with the highest scores. Doesn't make sense, but I would not be surprised.
I have no idea how the local percentiles are calculated, except the personal anecdote of our daughter who had one subtest score of 96 which translated to a local percentile score of 85. I was (and still am) pretty surprised by that, especially because I don't see evidence of any kids outperforming her in the classroom, even (?especially) years later. This was, of course, a subtest which she didn't complete, so perhaps that explains some of it, but I wouldn't put much stock in these results. Unfortunately, schools don't seem to see it the same way.