The school bureaucracy is a symptom of something else, as is the monotonous testing and the union power. The American educational system changed its premise back in the 1960s.
Since that time, we have become addicted to assembly line, one-size-fits-all, bulk format education in which we put kids through a ton of information and measure them by how much they retain. Not the quality of what they retain, and not their actual skills, but what they've memorized.
By prioritizing memorized facts over learned application, we are losing a lot of our most talented kids. To compound the problem further, this one-size-fits-all approach isn't calibrated to the smart kids, but to the average. In public schools, it's also impossible to send home the disruptive kids.
The result is a system that is so hobbled by contradictions that it is dysfunctional. Dysfunction attracts lazy administrators who like to use test metrics to force teachers to teach to the test, thus making everyone look like a success, even when the graduates aren't good at doing anything.
The recent spate of test-cheating scandals should show us exactly why these tests are in favor among administrators. Instead of a broad open-ended task like "teach these kids to reason," all you have to do is make sure they make a pretty bell curve on the standardized test.