The Education Review Office has called for an urgent overhaul of how New Zealand educates its most vulnerable students, as enrolments in alternative education settings have doubled over the past decade.
More than 8000 students are now enrolled outside mainstream schools - about 6000 with the Correspondence School (Te Kura) and 2000 with alternative education providers. The watchdog's report, published on 22 June 2026, found the proportion of younger students in alternative education has grown, with some children now entering at Year 9.
"We are failing the students who most need a quality education and missing an opportunity to change the lives of these young people," ERO senior manager Rebecca Bjarnesen said. "A step change is needed to reverse the trend of students disengaging from school."
The report found disparities in which students leave mainstream education. Those from poor communities and those who had periods not enrolled in any school were 5 times more likely to enter alternative settings than their peers.
The report identified suspension and being referred to specialists for learning difficulties as high-risk factors for entering alternative education. Most students in alternative settings were Māori, and a small group of schools - just 12% - made referrals for 60% of all students in these programmes.
More than half of students in alternative education or Te Kura said their families wanted them enrolled there. However, among Activity Centre students, 51% said they were placed there for being disruptive in mainstream classrooms, compared with 34% of Alternative Education students.
39% of Activity Centre students and 36% of Alternative Education students said violent behaviour was the reason for their placement.
Mental health challenges drove many alternative education placements. 41% of students across alternative settings said mental health problems made mainstream school difficult, rising to more than half of those in Te Kura's Engagement and Wellbeing Gateway.
40% of students in Te Kura's Engagement and Wellbeing Gateway said they had enrolled partly because they were bullying victims. A quarter of students said they were in alternative settings because learning needs went unsupported at their previous school.
"Schools lack what is necessary to properly look after and teach neurodivergent children," one parent with a child at Te Kura said. "My children were punished for their neurodivergent behaviours, and the school was always calling me to come deal with them or just pick them up."
An alternative education leader described how behavioural issues can mask underlying problems: "A student that we moved [to Alternative Education] used very poor behaviour to mask anyone finding out about her extremely low literacy and numeracy levels, due to learning problems connected with auditory processing and some phonics issues."
The fiscal and social implications of alternative education placements are substantial. By age 25, students who had been in alternative education settings incurred between $170,000 and $770,000 in additional fiscal costs compared with the general population.
When measured as multiples of general population costs, students in Te Kura's Engagement and Wellbeing Gateway incurred costs 18 times higher, Activity Centre students 27 times higher, Alternative Education students 28 times higher, and Residential Care students 80 times higher.
These students were 10% to 30% less likely to be wage earners and up to 1.5 times more likely to rely on benefits. 31% of Alternative Education and Activity Centre students had a court charge by age 24, rising to 54% for Residential Care students.
The report found academic results for students in alternative settings were often very poor.
Staff in alternative settings said they were concerned mainstream schools were making more referrals because they had less tolerance or capacity to manage student behaviour.
"Previously, we had cases where kids are being abused, missing big gaps of school, quite high risks, high needs," one alternative education teacher said. "Now we are getting kids that just have an attitude. I feel like teachers are becoming less tolerant in mainstream."
School leaders told ERO they were most likely to make referrals for poor attendance or behaviour, learning needs, and mental health reasons.
The issue is longstanding. In 2012 the Education Ministry said at-risk students were being dumped on Te Kura, and in 2023 ERO said alternative education providers needed more funding.
The report recommended making schools more accountable for retaining students and providing greater support to schools with high concentrations of at-risk students.
ERO called for more funding for alternative education providers and strengthened support for attendance, learning and behaviour, with support targeted where most needed.
The office also recommended creating a new model of quality alternative provision using qualified teachers to ensure all students receive high-quality education regardless of where they study.