The school system disadvantages schools with students from poorer backgrounds, and assessment of teachers should take those backgrounds into account, a think tank says.
In its report published today, the New Zealand Initiative called for an overhaul of the way the government measures school and teacher performance.
It said the current system did not measure how much students improved during the year and that masked the good work of schools with students from disadvantaged backgrounds.
That also allowed schools with a lot of rich students to cruise.
"NCEA rankings unfairly stigmatise as failures schools with students from low socioeconomic communities, while schools with affluent students sometimes earn undue praise," the report said.
It said the government should find a fairer way of judging and comparing schools, and Education Review Office reports should state how each school's performance compared to others with similar cohorts of students.
The report said one possible method would be to set pass-rate targets for each school based on its student cohort.
It said that would give recognition to schools that had low attainment rates but were doing a good job, and make it easier to identify poor performers.
Similarly, schools and the ministry could use data about students to predict end-of-year results for particular classes of students and use that information to measure their teachers' performance.
"These analyses can show teachers who did a great job in lifting the achievement of struggling students, or in helping the most able students reach their potential - all across similar classrooms in the country," the report said.
"Using this information would also show the exemplar and superstar teachers whose students considerably overachieve relative to their expected performance."
It said the Education Ministry should assess children's results at persistently poorly-performing schools so the schools could see if any of their teachers were under-performing.
Schools were overly cautious about measuring teachers' performance, it said, because they feared it would be "a blunt tool for blaming teachers for underperforming students".
It said the government needed better ways of helping poorly-performing schools.
"This could include facilitating exemplar schools to share their expertise by formally combining several school boards, and encouraging the non-government sector to participate in education provision through school governance."
The report said ERO reports should be clearer, and recommended adopting the English approach which started reports with a list of ratings against several areas of performance.
It also recommended bulk funding so schools could take full control of their budgets, including teacher salaries.
However, Post Primary Teachers Association Jack Boyle said that would be a 30-year backward step.
"Offering bulk funding as a reward for school leaders who are good, that's a poisoned chalice.
"Good school leaders around the country voted last year that they overwhelmingly don't want it."
Mr Boyle said the report contained too many inconsistencies and contradictions.