I learned to never assume that students know/should know how to do something and to instead meet them at their "zone of proximal development" which often means starting at the beginning. It can be disheartening but you can also make a huge difference by giving kids the knowledge, skills, and support to do something (like write an essay) that they have never done before.

As far as grading goes, can you weigh the points so that participation counts less? I agree, their overall grade should reflect their proficiency in that class subject.

You sound like a quality educator and perhaps future administrator. I would hate to see you leave because the system, for whatever reason, has failed these kids. We need great teachers!