Roughly: Education is tax funded so each kid has a pile of money in the local government budget. The school where the kid ends up, gets this pile of money. The kids (or rather the parents) can pick and choose between schools.

This naturally leads to a bunch of complexities, for example marketing catering to what the kids think they want (iPads, 3d printers, whatever) instead of what they need. Also, there's an incentive from privately owned schools to use this money as efficiently as possible.

(Note: when I say "as efficiently as possible" I try to mean that in a neutral way: if you are reading this and are left-leaning, feel free to interpret that as "the school will cut costs to make a profit" whereas if you are reading this and right-leaning feel free to interpret that as using the budget more efficiently than the government could).