In potential fairness to them, a huge problem is the lack of legal clarity. Are they going to get sued if they don't use the "right" pronouns because that will be considered discrimination?
My guess is that they tried to take the route they thought would be least likely to result in liability. Clearly, they guessed wrong if that was the case.
The school board members can always resign if they are afraid they might get sued for doing something that is right.