Measuring reading fluency is one of the formative assessments we regularly do at our school. Basically, we have students read two separate passages to us for one minute each three times each year.
Of course, there is a little more to it than that…
Reading Fluency: What, Why, and How? by Mike Dunn is a very good short explanation of how to do that kind of assessment.
I’m adding it to The Best Resources For Learning About Formative Assessment.