A government review has found that most of the approximately 8000 teenagers in alternative education leave without qualifications, with too many going on to benefits or crime.

The Education Review Office published its report on Tuesday, proposing a restructured system with enhanced funding to help students who have exited school or faced expulsion because of behavioural, mental health or learning difficulties.

The review proposes the government cut alternative education enrolments by giving schools more resources to support struggling students on-site. Secondary Principals Association president Louise Anaru backed the proposal, saying "if we had these resources in schools we could hire social workers for instance, specialist teachers, teacher aides and we could resource a learning programme, a short-term adaptive learning programme, aligned to the students' needs and then transition them back into the classroom".

Most alternative education growth has occurred at Te Kura the Correspondence School, whose full-time enrolments jumped from 3000 in 2016 to 9000 in 2024. The report found that online learning did not work well for struggling teenagers who needed in-person support.

ERO proposed a new model featuring more registered teachers, access to the full curriculum, provision at or near school sites, and improved funding. Around 2000 students a year attend small group face-to-face programmes run by alternative education providers who receive $16,536 per student, less than half the secondary school rate.

Dr Lloyd Martin, who has worked in alternative education since the 1980s, supported an overhaul but questioned the emphasis on teachers and curriculum. "If more teachers and more curriculum was the answer then why didn't school work," he said. "The real issue with alternative education is the intersection between learning and developmental stuff which addresses kids with trauma and neurodiversity and so on."

Teacher aides and social workers do much of the sector's work but face low pay and high turnover. Martin argued that alternative education should be a valid destination for students whose needs do not match mainstream schooling, rather than a temporary measure.

Te Kura chief executive Te Rina Leonard welcomed the report identifying issues in the system and said the organisation had lifted engagement with at-risk students by 10%. Education Minister Erica Stanford said the report was good and it was time to reimagine pathways for students who had disengaged from school.