This is thanks to "No Child Left Behind". Schools are incentivized to pass students up to the next grade no matter what. My wife was told by her school administrator that she was forbidden from failing students.
edit: I do agree No Child Left Behind creates a perverse incentive, just claiming that it's not what caused the problems at this school
What? How would you extrapolate that? The university system, for all its flaws, is very different from public high schools in a poor city.