The way Second Grade (here at Peters Colony) does spelling is rather unique. It is very individualized and allows the student to study words 'on their level' for the week. It allows for challenge as well as remediation.
On Monday, each student will take a pretest on ten basic words from the Spelling Unit. If s/he misses any of those words, they will study them for the week and be on their 'Hunters Words List'. For the words that were correct on the pretest, the class chooses Hunters Words that still follow the rule/skill as the basic words. The student chooses words off this list to fill in on their list, so as to keep a total of ten words (basic & Hunters, all basic if all were missed, or all Hunters if all basics were correct).
On Friday, I will give dictation sentences to the entire class as part of their test. The sentences will be based on the basic words. Then, each student will get with their spelling partner to give each other their individualized list test.
The process is quite tedious in the beginning of the year, but then it becomes routine and flows nicely.