Actually I think you could just do it on absolute test scores, thus making the smart children more valuable. Schools would compete to bring in the best students

Actually I think you could just do it on absolute test scores, thus making the smart children more valuable. Schools would compete to bring in the best students, not just to fill their classrooms, otherwise there's no particular incentive to offer the best educational programs. The best schools get the best students and get the most money, the worst schools get stuck with the dumbest students. Could lead to increased stratification. On the other hand, is it worth spending a lot of money to educate a student who is dumb as a doornail anwyay?