What is wrong with testing in schools?
For schools, we have the expectation that all kids will achieve a certain grade. Trouble is you have kids in a typical school with a wide spectrum of IQ’s and abilities. Not to mention there is a reward for the school and the teacher to get high scores.
So if you have a class room filled with kids who simply can't do the work, that teacher and school has a huge incentive to cheat. In the lower grades, you also have teachers with much lower IQ (teaching for the most part does not attract the best and brightest).
When you create an incentive to cheat, and have little oversight, you shouldn't be shocked when cheating happens.
This isn't just in government service. Most companies do similar things, with similar results. In short, when the risk/reward to cheat is more than to do the work, you will see cheating.