Perhaps a more important question is why does the school district feel your child should be retained? It is lack of maturity? Or an underlying learning, developmental or cognitive disabilty? Is it behavior?
Before beginning the debate of 'whether it is legal', I would want some clear answers as to why my child did not make adequate progress and what a repeat year might or might not do for him. For instance, some children learn via whole language reading programs while others need multi-sensory. No point in repeating something that will never, ever benefit the child.
What is the name of your state?NY