Imagine the humiliation this child felt, and how it might impact his attitude toward school, teachers, principals, etc., for such an attack on him, on his childhood. Institutionalized Racism is where we make/have rules and policies that only or especially apply to blacks and other people of color (ex: hair styles, shaving regulations, etc., that people of color may not be able/willing to accommodate).
First, this policy is unclear (perhaps by design). Second, it leaves enough room for an innocent child to be treated abusively because of some grown fool's lack of common sense! This is intentional humiliation. All one has to ask to get clear is, "What if this was my child, would it be acceptable treatment?" then ask, "Would anyone dare do this to my child?" If the answer is no, you may have the benefit of privilege.