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D. Prepare in advance for the ACLU lawsuit claiming that public gender identification harms the rights of Hermaphrodites.
Everyone will be treated exactly the same. Isn't that the definition of equal treatment?
I understand where you're coming from. But after working on the periphery of schools and having family who are educators as well... let me just say that there are people looking to make their bones at your expense by finding the exceptions and making them the standards. A hermaphrodite uses which bathroom? For instance. You could try and force them to choose the gender they identify with most, but that still leaves the door open to a lot of problems once phys ed meets puberty.
You can also try the route of, "your child just may not be suited for our school." and that's when the opportunists will, probably successfully in our current legal system, sue the crap out of you. Hence why Samson pointed out what he did.
E. Expand the school to make room for everyone that is retained because they fail a grade under your grading policy. More $$$ for teachers, and operational costs
There is no excuse for failing a class. Ever. If a student fails, he or she can study all summer and test out before the fall semester starts. If they fail, they repeat the grade. I am willing to bet that the failure rate won't be as high as you think it will.
You're right in that high expectations will equal a low failure rate AFTER the ability to survive the first two-five years is established. Unfotunately, as I've been seeing with private academies, many kids do not WANT to be there, but their parents do because they are trying to keep them out of trouble, away from bad areas/school, force them to man up to the work, achieve their highest potential and/or get some sort of name recognition boost. The kid n the other hand knows this, resents it and will deliberately flunk out just to get out of what they consider a shitty school and go back to be with average gangbanging students at the public school where they can be a big fish in small pond and wear their favorite clothes. Seen it many a time.
That said, your one failure and out will so diminish your pool of available students as to make your business model impossible in the short term. Maybe after 20 years of this kind of behavior and sufferin through years of high flunk out rates (comparatively), you'll do well.
The last hurdle will be staff negotiations with that policy. Many teachers, being as they are soft-hearted caring sorts (I'm being generous here for some) will not flunk a kid for anything but hide the fact and pawn the issue on the next teacher till, SURPRISE!, the nationalized tests come along and you are left with a kid that went from low/mid acceptable to dog dirt overnight. Then you have a bigger mess on your hands because, being a private school, parents may sue or bad press gets out if it's a large batch, and you can't fire the teacher thanks to state rules, and if you do, THEY sue...
You have to allow a small area for under-performance. But you can't just throw them out bam and expect to stay open long. You can cut them loose for underachieving at the end of the year if they don't pull out of it.
Like I said, a school like this, has a lot of people looking, hoping, interfering and trying to make you fail. Excellence threatens the mediocre, particularly if you're cost effective and they will do their best to bring you down to their level. Public schools and the unions don't want you to succeed because if you do, you provide evidence for them to be changed to doing something they don't want: excellence, because that's hard work.
It's a noble effort, but as you stated it currently, doomed in most cases. Tweak it a little and hire good lawyers, and you'd be golden at creating a very badass school. Just promise me you'll teach the constitution, economics and founding documents as a requirement for graduation?