I was under the impression that students outside of CPS were allowed to test. I think they are placed in tier 4. Myself living in Chicago, I don’t understand why they’re allowed.
If by outside of CPS you mean outside of Chicago, they can test now but must live in the city when school starts. This system is cheated by those such as the OP is referring to who use a false address within the city limits (that is not tier 4) on their application.