Well, I dunno about your kids, but mine said it a little different----they would say, "Don't be gay". Oh and BTW, that little saying has been out of vogue for what now? Several years? Haven't heard it lately
The first time I had heard it in years was back in 1996 where a human-resources employee at my new job uttered it when she found a goofy mistake in one of the forms.
Clearly, "that's so gay" is coming back into vogue again if the school boards have to ban its use.
Personally, I think that not long from now, "that's so gay" will be the slogan of an anti-PC backlash.