Your question is one that is asked by many people. In many states those students who fail are often required to be held back and to repeat the grade. Furthermore, as standards have been raised for all children, many states and local school systems will retain students who do not demonstrate grade level proficiency.
The reason for rentition is in response to the problem of students going through school and reaching high school without the ability to read or write at a high school level. In other words, too many young people have gone all the way through school and can not do grade level work when they graduate.
What is important is that the reasons for the problems are investigated and that there is a plan in place to help the child achieve in the following year. Simply doing the same work again in the same way may not be the answer.