I read an article about it recently. If a student asks to be called by a name other than the one they were registered with (for example, Benjamin asks to be called Ben or William asks to be called Sir Buttface) the school is supposed to inform the parents and get approval. A "side" effect of this is outing trans kids to their parents.
The other (minor but possibly cumulative) effect is that it annoys every parent whose child doesn't go by their birth name. Enough little cuts like that and the GOP loses plenty of voters.