I think prison labor's impact on the larger labor economy should also be considered, as should the financial incentives for longer prison terms it may create. I doubt either of these are insurmountable problems, but are arguably problems with the current implementation of the system.

In the case of public schools using child labor for discipline one possible problem is that the children, if they were actually effective laborers, might tempt a school district to suspend more children to get more work done around the school, and possibly even reduce the number of maintenance workers they hire. You'd want such a system strictly regulated and audited to ensure this sort of thing doesn't happen.

Somewhat related: https://en.wikipedia.org/wiki/Kids_for_cash_scandal