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I think you're getting confused on the meaning of "arrest." Being arrested doesn't mean getting punished, you're simply under custody. The actual punishment would then be given depending on the crime (ex. life in prison for murder). Don't get me wrong, I still think they shouldn't have been arrested, and that the school should've dealt with them. But when the alarm went off, the police did what they had to do.
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Sorry, but this is a very weak argument. Small or big, a crime is a crime, and cannot be ignored.
I don't think arresting them was necessary. However, suspending/expelling them would've been something I personally would've done. But still, I can understand the reasons behind arresting them, after all, this was a vandalism, which is considered a crime.
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Squeaky, uh, squeak, squeaker, squeakin'. (Translation: Yes... yes I am)