There's nothing fundamentally wrong with education. I think the three current problems are 1) education is expensive, 2) people are too poor, and 3) people of average or below average intelligence probably aren't served very well by the high school curriculum.Yes, it is, and it have nothing to do with our funding. The way we teach is extraordinary inefficient and outdated.
For example, spaced repetition is a learning technique that takes advantage of the spacing effect phenomenon that is present in all humans. You know why your teachers told you to study everyday instead of cramming? Well, cramming doesn't help you retain information in the long run! Computers can be used to track every answers and problem, what our weakness are, and to schedule when to review, allowing us to take spaced repetition to its logical conclusion. The computer can generate problems on demand, give out recorded lectures by the very best teacher, and so on.
Spacing effects also implies summer vacation is harmful to knowledge acquisition process unless we continuously practice. When we finish high school and college, decays begin to set in because we stop practicing. The result is that countless generation learned mathematics, history, language art, literature, only to forget upon exiting formal education.
That's why khanacademy is so powerful. They really do leverage computers to generate problems, explain stuff, track your every mistakes, and schedule practices problem using spaced repetition. Right now, long run khanacademy users like me knows more and is the most refreshed on mathematics than the vast majority of high school students and working adults. We practice math problems everyday, thus ensuring that we never forget and be prepared to build a new knowledge as soon as Khan Academy adds new exercises or revise old one.
That's in contrast to going to a very inefficient traditional institutions and receiving a "great education" and then immediately forgetting most of what you're taught. That's a very inefficient way to learn.