The follow-up report in May to a critical HMI evaluation of the authority in 2001 heaped praise on improvements in the council's performance, with the exception of its failure to implement a "best value" regime which included rationalising schools.
The record was judged fair and inspectors held back from giving the authority a clean bill of health pending another visit in March.
The decision by the full council, ratifying a committee recommendation, led to inevitable celebrations by parents. But at least one school is moving on to the offensive to ensure that it never again has to face the threat of being shut.
Phil Kennerley, chairman of Cullivoe primary school board on the island of Yell, said that parents were looking into building a nursery, using private finance if necessary. He said that not having a nursery had counted against the 12-pupil school during the best value review.
But one councillor condemned the entire best value process. Brian Gregson from Unst said: "We have just come through a period of three and a half years spending lots of time, energy and money checking to make sure we don't have a bit of fluff in our corporate bellybutton."
Brenda Hay, mother of the only two pupils at Out Skerries Secondary, said:
"This has been going on for two years for us and today we feel a huge sense of relief that a weight has been lifted off us. The last two years has been a horrible time. This is all that anyone has been speaking about."
The community felt it had been lied to by the council, which said initially that the review had nothing to do with money, yet that turned out to be the driving force behind the proposals.
The working group on education had proposed the cuts, which would have trimmed pound;550,000 from an annual education budget of pound;35 million. Shetland spends twice as much on education as it receives from central government. It also proposed extending the island's five junior high schools to six-year secondaries.
Alex Jamieson, the council's head of education, did not disguise his disappointment at the turn of events, following a "huge consultation exercise".
"It's the end of the story as far as we are concerned," Mr Jamieson said.
"The arguments were really about the community, not education - tearing the heart out of the community and so on. There would have been considerable improvements in the quality of education as a result of our proposals but that didn't feature in the discussions at all."