Warning that Americans face a grave risk of losing their prosperity and high quality of life to better educated workers overseas, a panel of education, labor and other public policy experts yesterday proposed a far-reaching redesign of the United States education system that would include having schools operated by independent contractors and giving states, rather than local districts, control over school financing.

The panel, the New Commission on the Skills of the American Workforce, included two former federal education secretaries, Rod Paige, a Republican, and Richard W. Riley, a Democrat; two former labor secretaries, William E. Brock, a Republican, and Ray Marshall, a Democrat; and an array of other luminaries, including former Gov. John Engler of Michigan, and the New York City schools chancellor, Joel I. Klein.

The commission’s report, released at a news conference in Washington, rethinks American schooling from top to bottom, going beyond the achievement goals of the federal education law known as No Child Left Behind, and farther than many initiatives being pursued by the Bush administration or by experimental state and local school authorities. Among other things, the report proposes starting school for most children at age 3, and requiring all students to pass board exams to graduate from high school, which for many would end after 10th grade. Students could then go to a community or technical college, or spend two years preparing for selective colleges and universities.

“We have run out the string on a whole series of initiatives that were viewed as hopeful,” said Lewis H. Spence, commissioner of the Massachusetts Department of Social Services and a member of the panel. “This puts a whole new set of ideas on the table.”