The Liberals took over the skool system in 1978 with the creation of the Department of (mis)Education. It's been a downhill slide ever since.....quite apparent if you look at the test scores year to year, compared to other industrialized nations. Dramatic slide, despite the gubmint's best efforts to make the tests easier and to teach the test to the "students"....
There's a book out called The Deliberate Dumbing Down of America by Charlotte Thomson Iserbyt. It's a real eye opener. This book documents the slide in the American education system over decades and backs up the theory with lots of gubmint documents released through the FOIA.
I think this is the answer to your question of "what happened".....I know in my own area it explains why I run into so many young adults that have graduated high school, but are functionally illiterate....
we do have that very same problem in Australia. Young people who cannot express themselves verbally or in writing, with very limited vocabulary...the sad fact is, their teachers are no better.
There was a small experiment conducted in Queensland recently; a group of teenagers were asked to sit an exam that was given to young people of their age - in 1890.
They ALL FAILED.