I agreed to a sealing of the record application from a juvenile who successfully completed informal/deferred probation for a felony theft case. The Court signed off on the sealing without a hearing. The application for the sealing included the juvenile court, clerk, prosecutor's office, all law enforcement agencies involved and also the school. The code allows for sealing all records of a "public or private agency or institution" - can that wording include a school? The school district's attorney is saying that the school records cannot be sealed.

If the school was properly served with the Motion to Seal and given the opportunity to file an answer and be heard, then they are properly before the court and their records can be subject to being sealed. If they weren't they can probably say, "Well, we weren't properly before the court so we don't have to abide by the court's order." The student's attorney would have a responsibility to properly get them into court and try to enforce any order.
My argument would be that the schools put themselves into this situation when they acquired their own law enforcement agencies and when they secured Section 15.27 in the code of Criminal Procedure which required law enforcement and prosecution to inform them about the case. 15.27(a) includes the requirement that the notice provided the school must "INCLUDE SUFFICIENT DETAILS ABOUT THE ACTS ALLEGEDLY COMMITTED BY THE STUDENT TO ENABLE THE SUPERINTENDENT OR HIS DESIGNEE TO DETERMINE WHETHER THERE IS A REASONABLE BELIEF THAT THE STUDENT HAS ENGAGED IN CONDUCT THAT IS A FELONY..." [and this is BEFORE any adjudication]. Thus the schools have put themselves into the "juvenile records" business and should be subject to the provisions of the family code. Likely there is information regarding the offense in the school records which should be subject to the juvenile court's order.
That being said, I would be explaining to the defense attorney WHY he doesn't really want to "seal" ALL the school records, but only to remove all information relating to the alleged offense. I would suggest that perhaps the defense attorney and the school attorney could sit down and work out some agreeable solution here.
I would take care of the prosecution records being removed and tendered to the court and the indexes (if any) being deleted and let the defense attorney go to war with the school on behalf of his client. It's his job to do so, and he has to answer if the right stuff isn't removed or the wrong stuff is removed from the school's files and records.

First, there may not be a big need to seal such records. See TEX. EDUC. CODE � 37.017 (Information received by a school district under TEX. CODE CRIM. PROC. art. 15.27 cannot be attached to a student�s permanent academic file and it must be destroyed at the end of the school year in which the report was filed.). Under art. 15.27, information provided to a school by police is not available to the public; any person who receives information under the school notification rule may not disclose it except as specifically authorized by law. A person who intentionally violates this law commits a Class C misdemeanor.

On the "institution or agency" issue, I think that the high school was at least entitled to notice of the sealing motion. 29 Tex. Practice sec. 532-533. I guess a high school is an "institution". See Education Code � 37.151(1) ("'Educational institution' includes a public or private high school.") If you give the school notice of the sealing motion they can make their argument to the trial court and it wouldn't be your problem.

(started this before Kris' answer was posted so if she makes better points I'm not ignoring them -- just too tired of subject to think about it anymore)