I think there might be something in the home-school laws that gives the schools some rights to test the students and some obligations to let those students be involved in activities and maybe some courses. The testing goes both ways. There have been school systems that have been seriously embarrassed when home schooled students get the best grades on Iowas.
The teachers and school officials use the tests as a way to measure whether their methods are succeeding or not; tests also indicate where individual students need help. Testing isn't evil.
In Washington all home-schooling parents are required to test regularly.