Because that judge said that the school has to give them the diploma anyway, remember?
Of course, one could also ask how they got to 12th grade without being able to read & write English, but I think some of that has to do with mandated ESOL and Special Ed. programs as well.
Some of the rest has to do with parents, teachers, and/or administrators who are afraid that students' self-esteem will be harmed if they fail in the lower grades.
There was an elementary principal near here who would not allow a teacher to "fail" any student, no matter what the student had or had not done or learned. The principal's philosophy was that the student hadn't failed to learn, the teacher had failed to teach.
> "Why are they getting a diploma"? <
It really looks as though we are living in an insane asylum.