I can't speak to your particular regional issues but basically the testing is to insure that all children are at a quantifiable level of educational knowledge for each grade level.  If a child can't keep up at higher grade levels then it takes increasing levels of resources to help the child cope.  As they get more and more out of their depth, additional one-on-one work and tutoring is needed which (A) costs money and (B) means less teaching time for other kids. If you dumbed down the test because children weren't passing then you'd be dumbing down your entire curiculum.  

Overall though I think that standardized testing tests a kid's ability to take tests, not their knowledge.  The purpose of getting grades in the first place is to let each teacher individually assess the abilities of each student.  By definition if kids passed their classes they were ready for the next level. What can be done?  Write your congresspeople and tell them that you prefer teachers to teach and government to focus on something useful, like balancing the budget.