NB,
What you believe very strongly is irrelevant to law. There's a reason why the school didn't fight this. They and their attorneys know very well that they're in violation of established law and they'd lose the case and a lot of tax-payer money that ought to be used to actually educate students. If you actually think your very strong personal beliefs mean anything vs. the US Constitution, please file a lawsuit based on your beliefs and interpretations and let us know, so we can follow it.
There is a lot of leeway and protection for personal expression (moment of silence is appropriate) but don't confuse that with a government agency cramming any one specific religion down the throats of a totally captive audience. That is wrong and also happens to be against the law.
A school allowing someone to lead a voluntary prayer is not unconstitutional. No one is being forced to adhere to a religion.
The school didn't fight it because they don't have the funds to do so, you're right about that. However, their decision is based on money not on whether they did something illegal. They did nothing illegal.
Sure, there is the whole "separation of church and state" deal which is not in the constitution at all. It has taken precedence because the Supreme Court used it in a ruling.
The Supreme Court also once ruled that it was constitutional for Dred Scott to be considered another man's legal property. So they're not always right.