The Education Review Office is calling for a complete overhaul of our alternative education system - where small groups of young people who are disengaged with school go to learn.
The watchdog said it's failing our most vulnerable children, who aren't getting the support they need. But the sector says it's due to a lack of funding.
Lyriks Activity Centre is the last line of defence in the battle to keep students in school.
"We're about creating opportunity, we take in young people who've been removed from secondary school for whatever reasons," Lyriks Activity Centre CEO Justin Wilson said.
Some of those students have experienced trauma, violence, and crime.
The Centre provides alternative education, to try and keep them engaged. Its CEO says while each day has its challenges, for the most part, it's a success.
"Sometimes it's the little things, I can remember a young boy sending me a packet of Mallowpuffs from his first wages, sometimes it's not instant, sometimes it's four-five years down the road," Wilson said.
But a new report has found not all providers are meeting that same standard of care.
"The model is broken and so we're calling for an urgent and complete reform of the model," Education Review Office deputy CEO Ruth Shinoda said.
The report found most alternative education facilities are run down and only one in five teachers are registered.
Less than 10 percent of young people in this type of education achieved NCEA Level 2 and by 18 years old, more than a third had police proceedings against them.
"Every child in New Zealand deserves a registered teacher, good facilities, and opportunities to learn," Shinoda said.
The alternative education governing body agrees an overhaul is needed, but says it all comes down to funding.
"Lack of funding is the key reason why our alternative education students don't get qualified experienced teachers," Alternative Education Governing Body southern South Island regional representative Lois Conway said.
"We did put $25 million into it in this Budget, and we're committed to improving it," Associate Education Minister Jo Luxton said.
So hopefully more providers like Lyriks Activity Centre can succeed.