On the passing of the Abolition of the Provinces Act of 1875, public education, until then the responsibility of the Provincial Councils, became the direct concern of the Central Government. The outcome was the Education Act of 1877 which established a national system of public primary education with a three-tiered administrative structure. Control of the system was to be divided between:

1. A Department of Education, under a Minister of Education, which was to be responsible for distributing grants to education boards (including a general purposes capitation grant) and which would regulate by Order in Council the standards of education to be maintained by boards.

2. Twelve education boards which were to define school districts within their areas and to establish and maintain public schools in those districts, including district high schools in rural areas in which secondary instruction could be given. Each board was to consist of nine members elected by the school committees of its district.

3. School committees elected by a ballot of local householders which were to have the general management of educational matters in their school district.

The Act of 1877 was expected to provide a decentralised system of public primary education, with a balance of forces between education boards and school committees which would leave the real power with the latter. Nevertheless, public primary education continued to be dominated by the education boards after the passing of the Act. The boundaries of the new education boards were largely those of the old, and inevitably the first elections returned a majority of previous office holders. As the officers of the old provincial boards remained to serve the new, the boards could thus draw on a fund of administrative experience.

The school committees, on the other hand, were many and widely scattered in an age when communications were poor. Consequently, they had few opportunities for developing a concerted policy on any aspect of education. Their position would have been stronger if they had been responsible for larger districts, but the boards defined school districts in terms of single schools.

If the Education Act of 1877 did not clearly demarcate the respective spheres of authority of education boards and school committees, it failed also to provide the central Department with the means for carrying out its limited functions. Although the Department prescribed standards of education and determined in detail the method for calculating the average attendance on which capitation grants were to be made to boards, it had no local officers or other means of ensuring that its prescriptions were carried out or that grants made available to Boards for particular purposes were applied to those ends.

The first phase of the system of free, secular, and compulsory education established by the Act of 1877 ended with the retirement of W. J. Habens as Inspector-General of the Department of Education in 1899. Throughout the period, there was no general consent that the Act had brought into being an ideal balance of administrative forces; nor was there any indication that the system of grants to boards would bring about a desired levelling of educational facilities throughout the country. Further reforms in the period had been precluded by the strong political influence of the education boards and the general belief that any attempt to interfere with a national system of education precariously achieved in 1877 might lead to the collapse of the whole system.