The State is Virginia and it is a policy only at this school system. I also, don't think they allow persons to coach who are not teachers at the school. I am not sure about administrators, I know some districts don't allow AD's Ast Principals etc to coach teams.
The story I heard was that MANY years ago the school had a nasty reputation for their coaches behavior and this was the only solution that worked.
Again, I have never had a problem (other then the hurdle) with any of the boys or girls coaches and don't think too many other officials have either. PLUS they give us a pizza drinks and all the left over popcorn to us after the game!