> Your first point is in tension with your last point.
It really isn't. Every student should have access to quality education that meets them at their level and challenges them. Money spent doing that is not wasted on the vast majority of students. We do not need to have trash tier schools for the majority of the population so that a select few can get better ones.
Identifying where students are at and what their needs are is a good idea that would enable kids to be moved to classes where teachers can work with them at their level. It doesn't necessitate refusing a quality education to anyone. Even students with special educational needs and disabilities deserve a good education.
When students are placed in classrooms according to their level it means that no teacher is pulled away from gifted kids, because those gifted kids have their own teacher working with them. It doesn't mean that children who aren't gifted can't get a high quality education. Putting kids in a class too far above or below their level is not delivering a quality education to them.
Giving every child an environment where they can learn to the best of their ability is expensive, but it's nowhere near as costly as not doing it. Uneducated illiterate children become uneducated illiterate adults and voters. It's not a coincidence that most prison inmates are functionally illiterate. Having a good education enables more children to have a successful future.