Mrs. Shindy:
I thought once you have a sibling in a Lakewood school then you are set (and can go work). I guess it is different in other places, and there are exceptions.
I can only think they thought you would remove your other child if the younger one didn’t get in, and that way they didn’t have to deal with him/her. Note that is still not a good reason to reject a sibling.
I believe that in this case (Lakewood), it is more of a money issue (either on a specific or aggragate basis), though I am (B”H) not involved.