A Pennsylvania school thought it would be a boon to learning if they gave every student a free laptop. Naturally, there were some strings attached; the machines had to be used for school-related work, for example. But then the administration went all 1984 on the students and started using the installed spy software to see what was happening when the machines were off-campus. Oh, and looking at email and other personal items were also apparently part of the deal.
I understand the thinking behind throwing laptops at students. Hey, maybe having another six pounds to carry around in a backpack will stop the damn running in the halls. Your school looks all hip and computer savvy, and maybe Steve Jobs will tweet about you in between releasing pre-existing gadgets in fancy new casings with bloated price tags. Maybe all those kids who don't study were suffering from some rare form of dyslexia that only affects their abilty to read from books, while .pdf files remain remarkably clear.
And it certainly makes sense that if a school is going to hurl free laptops at people, they're going to want to ensure they're used for school-related functions. But even a teenager, the lowest form of life in America (at least as far as rights go -- have you ever tried to read an unborn child's email? The state would hammer you for that, my friend) has some expectation of privacy when it comes to personal correspondance.
This particular school district is denying any wrongdoing. Thinking it could give a laptop to a person and then pretending it retained all rights to it was where it went wrong.