Officials said they were heartened by data suggesting some narrowing of the achievement gap between white and Asian students and those considered "underrepresented minorities," including low-income, Hispanic and African-American students.
Some of the biggest API gains came among the underrepresented groups, helping to drive Palo Alto to sixth best among California's K-12 districts.
"There's still a gap and I want to acknowledge that, but we did see growth across all these subgroups," school district statistician Diana Wilmot said.
But board members worried aloud that Palo Alto's overall stellar test averages are unduly discouraging to the many strong students who do not meet them.
A student in Palo Alto's 25th percentile on the SAT would be in the 75th percentile if measured against California or nationwide averages, according to data presented by Wilmot.
Nearly a quarter of 2012 graduates achieved recognition as National Merit semi-finalists or commended scholars — standing reserved for the top 2 percent of scorers in the nation on the Preliminary Scholastic Aptitude Test.
"How ridiculously we live in Lake Wobegon, and I really don't think our high school students get it," board member Barbara Klausner said.
"I wish we could share this with them in some way. Our students need to understand they live in this community where things are just really skewed in one direction."
Klausner suggested the skewed nature of the scores could be a topic for the required high school class in Living Skills, where students have discussions about "their general sense of self."
Board President Camille Townsend said, "We live in a community where the norm isn't the norm it is in most places. Hopefully our students will have strengths in many ways."
On the SAT, both performance and participation levels of Palo Alto students increased in the past five years, Wilmot said.
The number of test takers rose from 735 to 799, with the mean score in critical reading up from 625 to 635; the mean score in math up from 661 to 668; and the mean score in writing up from 630 to 642.
Parental education level was tied to student performance on the SAT, with a 2010 average for students whose parents have graduate degrees and a 1705 for students whose parents did not go beyond a high-school diploma or an associate's degree.
On the Advanced Placement tests, Wilmot reported that the number of exams taken by Palo Alto students has risen by 23 percent in the past five years, with a consistent 94 percent of students scoring 3 or higher.
More than half — 53.1 percent — of the 3,154 exams taken in 2012 earned the top score of 5.
Wilmot added that nearly three-quarters of Palo Alto's seniors have taken and passed at least one AP exam before they graduate.
She said detailed information would be posted at http://pausd.org/community/researchevaluation/index.shtml.