Google is not "cutting off Search from AI-free schools". They're refusing to supply AI-free Search. It takes less theorizing to understand if you phrase it this way.

Everyone complained there should be a way to disable AI, and that it should be on by default. For some reason (curiosity still makes sense here), Google did some 'malicious compliance' and added the AI switch-off without making a new version of search, and disabled AI by default.

My personal theory is some sort of moral liability thing, where they're hoping you blame your school district and tell them to switch platforms, so that if/when they don't, it's "their fault", not Google's.