The government inherently is not going to handle money efficiently because it is not incentivized to do so. In any public vs. private debate, whether it is about education, health care, or whatever, it is essential to go to first principles. We know what typically motivates private enterprise: profit. Sometimes the focus is on short-term profit goals, sometimes the focus is on the long-term, but it is always on maximizing profits. If you are running a private school, for example, you are incentivized to provide an education that satisfies the parents who pay tuition, who are your customers. If the school has a great reputation, the higher the demand, and the more that the school can charge, thus the greater the profits. Note that even non-profit schools are similarly (albeit not identically) incentivized because, if they provide a bad product, they go out of business completely. Compare that to governments. What do you think motivates governments? Is it solely the public good? There is considerable literature on this theory, and generally the answer is no. Government entities are motivated to protect and extend their own power. Now, education is a public good, and for that reason it is generally regarded as appropriate for governments to educate its citizenry. But the key is to properly incentivize the government to do so, and that has eluded policymakers. Who is accountable if the schools fail? Can administrators be fired for poor performance? By whom? Who can fire that person, in turn? Can bad teachers be fired? In California and many other states, generally the answer is no, due to unions and tenure. An administrator or politician is more likely to be ousted by angering the union vote rather than by failing to educate children effectively. And therein lies the root of the problem of public education in the U.S. If schools do a poor job educating children, there is not much to incentivize them to teach better. So, the government adopts standardized testing and ties funding allocation to test scores, which on its face seems like it might work, but in truth this just leads to unintended consequences such as "teaching to the test" and sometimes outright cheating, (Again, read Freakonomics). It is obvious to me that this debate has strayed from the core principle of what the government's incentives are.
And, to Onhell's point about better education in more affluent neighborhoods, that may be true comparing one district to another district. However, it does not explain striking differences in schools within a district, such as L.A. Unified School District. Do affluent neighborhoods generally have better schools? Yes. Is it because the government funnels more money to more affluent neighborhoods? No. It is because parents are more involved, either in the classroom or in fundraising or both. Our son goes to public elementary school, and a very good one, and the reason it is so good is that parents voluntarily pump additional funds into the school, far beyond what the government allocates. Often, the reason poorer neighborhoods have bad schools is that the constituents aren't as committed to education. People who value education tend to be more affluent, because they are well educated, and they are affluent because they were well educated. Of course, it is not a kid's fault if his parents are poor and/or don't value education. But that is a fundamental problem.
Of course, none of this explains the case of University High School in West L.A. It has Westwood and UCLA immediately to the east, Santa Monica immediately to the West, Brentwood immediately to the north, and Bel Air and Holmby Hills nearby. These are some of the wealthiest neighborhoods in the world, and predominantly Caucasian. All those neighborhoods are within the geographic boundaries of University High's service area, meaning that if the folks in those neighborhoods sent their kids to the assigned public high school, it would be Uni High, and would be one of the wealthiest (and whitest) public schools in California, indeed the entire U.S. One would also expect it to be one of the best. Yet, it is one of the WORST public high schools in California, and the student body is less than 10% white. It effectively services only the poorer, mostly non-white families to the south. If the rich kids went to school there, presumably it would benefit the poorer kids, because the rich families would support the school, be more effective at pressuring the district to assign good teachers there, etc. Instead, the rich families opt out of public school to send their kids to private school, at a cost of over $20k or even $30k per student per year. This is the clearest indictment of the government's ability to run the schools I have ever seen. To me, that is the test of any school admnistrator: if you can't turn University High School around such that even half of the affluent white families in the neighborhood will send their teenagers to that school, then how can you possibly hope to turn around schools in the poorer parts of town.
Let's stick to the good points: