Thanks for the ping. Anything literary interests me! I haven’t read a short story that matches your description. Some unacceptable kids—or they may have been babies—were euthanized in Lowry’s The Giver. I didn’t think much of the book, and (not being a short story) it’s probably not the one you had in mind.
Thanks for the reply, but that is not the one. The one I am thinking about is only about five pages long. The set up was perfect, as one could infer what the consequences were for a ‘fail’, but then the twist at the end with the elevation of mediocrity above excellence was perfect, and entirely too plausible.