A child at school (actually two kids have said it) called my son, "mexican burrito" and then "shut up, mexican burrito". I emailed the teacher after my son told me this weekend. The principal this morning said he would work on it (or something like that, I was late for work). So I get an email saying he followed up, it's unacceptable and the child lost recess. It said I should let them know if it continues.
I am not at all satisfied with this response, but then I am still shaking with rage.
Yuck. I'm sorry. I would definitely meet with the school counselor and express your concerns.
Would it be helpful to ask to see/have someone go over with you the process of how the school deals with slurs, teasing, and bullying? Our school has a really involved process that I really like--but it could be summed up by what the principal told you (though the other child would not have lost recess, at least not at that point).
Make an appointment with the principal and/or school counselor (if you have one, our district does not fund them for elementary schools) and tell them that you want to know more about the process. If they can't answer you, or if they do not seem to have one, that might be something to escalate (I would, it's more and more common for school districts to take bullying and discrimination very seriously now).
If it's any consolation, my kids are white, attending a school that is half white. They get teased because their mom is American. One kid imitates my accent to my dd in class (he's white too, btw). The point is that she's the top of her class and he's struggling so there's no mystery why he's picking on her.
My son did overhear a child say that Americans were stupid and I did go to the school. They did address it but they let me know that kids repeat what they hear at home. They can punish the child, who may not really comprehend why "Mexican burrito" is a racial slur, or why they can't say that Americans are stupid for killing people, when that's clearly logical. They also can't prevent children from hearing this kind of trash at home. Kids don't really evaluate their comments very well and to them, saying that another kids' snot is green is far more of an insult in their Kids Rulebook IYSWIM.
Let's face it, if your son had called him "whitebread", I'm sure your son wouldn't have lost recess! I did make it clear at school that they weren't to dismiss these comments even if they weren't strictly racist. That attacking my children's second nationality was not something I'd put up with.
By all means find out what the school's policy is and let them know that this will not be tolerated. But it can be hard to measure up whether your son is dealing with a very real racist situation or whether your son is in class with kids who hear too much trash talk repeated from home. Either way, the behavior has to be stopped but please don't lose sleep over what may be an isolated incident.