Assuming you're correct (and I suspect your are), that it's mandatory school system policy to report such occurrences up the chain, and from there to the police, then the real beef is with the school administration that came up with such a extreme policy, and the
local Board of Education that approved it. They should go to the BOE to get the policy changed, and if the BOE refuses this should be remembered come elections.
However, the teacher is not off scott-free IMNSHO even if they had to report the incident. I would be very surprised if the policy FORBID the teacher from contacting the parents. A quick phone call, text message, or even an "Isaiah please get your parent so I can quickly talk/chat with them offline" could have made a world of difference (ex. "Mr or Ms Elliott, Isaiah just showed a toy gun to the class. I'm sorry, but I'm forced to report this by (stupid) school department policy. I'll tell them it clearly was a toy, but here's what's likely to happen ... If he is suspended, which is likely, here's what I can do to help him keep up ... Again, I'm sorry.")