Right problems - Wrong solutions (Education)

In his 'Not State of Union' speech Obama recognized some important problems that needs to be addressed for long run health of the economy.
Health Care, Education and Energy. I'd add social security and defense spending to that.
I was impressed. But once his solutions are being laid out it is not good.

Education
California has the highest state taxes in the country and it spent 31% and 10.3% on K-12 and higher education respectively in 2008-2009. (20.4% and 8.6% in 1992-1993)
I have no big problem with spending on higher education. US has the best of the schools in the world. It is an merit based open system. Any one can study anywhere as long as they can get an admit.
But K-12. Spending 31% of all state tax revenues on state run education system is unacceptable. This is not all that is spent on education, local and federal governments also spend money on k-12 education.

What is the problem with the state run education? too many to list.
low paid teachers
no competition and no incentives for the brightest minds to be in the teaching...
choice of schools
you can only go to the school in your community. no regard for choice. homogeneous class rooms. artificial inflation of real estate in communities with good schools.
no child left behind
...
...

Pouring more money into the failed education system would not lead to more quality or quantity, it just goes down the drain. giving computers to the schools wouldn't help if they don't have competent teachers. competent teachers would be possible only with competitve incentive based market. Most of my friends never knew how to use computers until they got admitted to engineering schools, but now they are doing cutting edge work in computer science because they all came from a very competitive education system and knew all the basic mathematics and sciences.

It's so easy to see anywhere in the world and I am stunned how the US is turning a blind eye to the facts. Govt. involvment should be in oversight, not in management.

http://www.ebudget.ca.gov/pdf/BudgetSummary/SummaryCharts.pdf
http://www.caltax.org/RESEARCH/spending96/spend96.htm