Few things make such a positive difference to the lives of individuals and the health of the nation as high quality education. For individuals, it is a key determinant of health and wellbeing, correlates with higher earnings, lower incidences of unemployment and lower rates of crime. For communities and nations, a more educated workforce is a more productive, healthy and harmonious workforce, with higher levels of civic engagement.

While schooling policy is a high priority for voters and governments, decades of reform efforts and major increases in funding (40 per cent between 2002 and 2012/13 alone) has not translated into improved educational outcomes. Instead we are witnessing the persistence or exacerbation of problems in Australian schooling. Performance on literacy, numeracy and science tests is flat or falling. Gaps in school resources, school performance and school outcomes are mostly stubborn or widening. And there is an unjustifiably large and growing correlation between student background and educational outcomes. A generation of children, especially those from disadvantaged backgrounds, are missing out on the education they require to thrive.

A big contributor to these problems is the current, ad hoc distribution of state and federal roles and responsibilities in education.

Indeed the mixed and overlapping responsibilities of Australia's education system makes it one of the most complicated in the world.

While states have primary responsibility for schooling policies and regulation, and provide 76 per cent of all funding for schools, both levels of government provide funding to public and nongovernment schools, regulate them and develop particular policy programs. Schools and school systems are operating in a complex web.

Our federal system of government is the foundation on which all education reforms rest, the framework through which all policies are developed, implemented and evaluated. When roles and responsibilities are misaligned (as the Gonski Review of School Funding repeatedly suggested they were), resources are wasted, accountability is blurred and even the most promising policy reforms can be limited (or worse, perverted) in their impact.

But when the settings are right, our federal system of governance can be a powerful force for sustained educational improvement.

It can promote innovation and learning towards continuous policy improvement, enhance transparency and accountability, and allow schools and systems to meet their students' diverse needs in a much more sophisticated, cohesive and tailored way. This makes for much more effective policy, better targeted funding and higher educational outcomes.

The federal government established the Reform of the Federation White Paper Process to examine these complexities in schooling and other portfolios with complicated, opaque and contested settlements of state and federal responsibilities, such as health. A taskforce within the Prime Minister's department recently came up with four reform proposals for alternative intergovernmental arrangements in schooling, proposals that Australia's state and territory leaders are currently considering.

In a report written for the Melbourne School of Government and released this month, I measure each of these proposals against the six criteria that the Taskforce and Council of Australian Governments developed. I also consider political feasibility, desirability and constitutionality.

Option 1 offers the greatest benefits in service quality, efficiency, equity, effectiveness, accountability and subsidiarity. Under this option, states and territories would have responsibility for system design, program development, implementation and evaluation, regulation, and funding for all schools in their jurisdiction. This alignment of roles and responsibilities maximises policy cohesion, the effective use of resources, strategic planning and the ability of governments to strategically and flexibly respond to the needs of students and school communities.

It also simplifies life for all schools and school systems, which would only need to respond to a single level of government.

This allows them to focus their resources on what matters most – student learning and other priorities identified by their school communities.

The retention of ACARA (the Australian Curriculum Assessment and Reporting Authority) and the Education Council (of state and federal education ministers) will facilitate intergovernmental learning, collaboration, and reporting on shared goals in the national interest.

Option 3 (Status quo but with reduced Commonwealth involvement) provides the same potential benefits as Option 1, although to a lesser degree, and is susceptible to role slippage.

Option 2 (split funding responsibilities) and Option 4 (Commonwealth provides all funding while states do everything else) ought to be avoided. They will worsen existing problems in Australian schooling.

Implementing either Option 1 or Option 3 will require sustained commitment from all parties, all levels of government and fiscal reform so that states have an increase in revenue to match the increased spending responsibilities. But it must be done.

Costs of inaction is high. But rewards of intelligent realignment of responsibilities are enormous. We owe it to our citizens.

This article originally appeared in DemocracyRenewal.