"I have to say I agree with the school here. As long as said school is not recieving my tax dollars which I don't think it is. A purely private school should be able to enforce whatever admissions/selection policy it wants to for whatever reason it wants to. The federal government should have no dog in this fight whatsoever."
Problem is, the trust fund is tax exempt, therefore, they are receiving your money.
You are 100% correct about the tax-free status of the Bishop Foundation. I had forgotten about that. I believe that was challenged about 6 or 7 years ago, and the same 9th Circuit upheld the tax-free status. But wasn't Bob Jones University denied tax-free status for being against interracial dating or marriage? Hmm - wait, Bob Jones U is a evil white man institution, and Kamehameha Schools is practicing affirmative action. Yeah, that makes sense.