Ideally more information would be required but from what you've briefly described - They don't have the right to demand money for you to recover your own property. Property that is 'lost' still technically 'belongs' to you; there's probably even some merit in saying that what they're doing is unlawful.
Going only by what you have said above, missing facts missing,
and with any unstated ifs, buts, maybes and exceptions not allowed for,
I am inclined to share
@Iamthelaw's view that what they are doing may not actually be lawful.
When talking about retaining people's property,
there's actually a legal thing (a tort, a so-called "civil wrong") called "detinue",
which (in grossly simplified terms) is
ye olde style lawyer-speak for
"unlawfully keeping somebody else's stuff after they ask for it back".
As for the demanding money thing,,, as my teenagers would say, "I cannot even!"
While it might be different for lost school property, such as a school supplied cricket bat or somesuch,
I cannot imagine a circumstance where such a thing could be lawful in respect of one's own property.