I don't think people should have to note if they are straight or gay. It's their business, and they can like who they want to like. Most people probably wouldn't answer truthfully for fear of discrimination. Schools should promote tolerance, and making people 'admit' things they would rather keep private is not a way of helping its process move faster, in my opinion. Students should want to be open with teachers, not trying to hide anything, like this type of question on school forms might make them want to.
As the question states, they are declaring it with their school administrators, not their friends. A school counselor isn't going to ridicule someone for being gay (under normal circumstances). It doesn't state anywhere that the school is going to be intolerant of gay students, they just want information to identify their own students. A student can easily request secrecy with this information and wouldn't have to be worried about being classified as gay to the public. After all, schools have no reason to go against their own students
If a school is tolerant or not is really important, and if a single administrator is not, that could cause hard times for the student. It's not just the student's peers that could be judgmental of the individual's sexual orientation, but adults can be, too. Why would the school NEED to know if a student is gay, bisexual, or straight? It may be useful to prevent any intolerance, and the student better be able to request privacy, but this should not be a mandatory question. The child may not want even one person to know, and it could make being around that administrator very uncomfortable. Even if they choose wether to answer it or not, there can still be discomfort. The person could be torn wether not to answer it and arouse suspicion, lie, or tell the truth. It could possibly be very stressful. My main point is, it doesn't matter if the child's peers know or not, the person may just want to keep this completely private.