sapiens

I think one of the primary problems is the way that money is spent. I don't think that professional educators know what will improve learning (at the level of questions regarding money spent where). They aren't trained to do research examining variables across large groups of students, teachers, and schools.

Studies I have seen demonstrate that low student teacher ratios, computers in the classroom, etc. don't improve student performance. One of the few school related variables that affects student performance is the verbal intelligence of the teacher (A result demonstrated in the Coleman Report).

Money certainly helps, but I would put it toward hiring smarter teachers. In my experience, grade school and high school teachers are either brilliant saints or not-so-bright slackers. Increase the salaries of teachers across the board. The field will become more competitive, resulting in more intelligent, more effective teachers. Bright, caring college students who would have otherwise gone into other higher paying professions will consider education.

EDIT: Here's an interesting summary of several studies examing teacher and student performance. It was written for the Texas legislature, but it's conclusions could be applied to education across the country. PDF