This is a partial transcript from "The O'Reilly Factor," March 3, 2006, that has been edited for clarity.

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BILL O'REILLY, HOST: In the "Factor Follow-up" segment tonight, protecting America's children and kids all over the world.

At the Eagleswood Elementary School in West Creek, New Jersey, 70-year-old William McBeth routinely worked as a substitute teacher. But after summer break last year, William returned to school as Lily McBeth. He'd had a sex change operation. The school board said fine. Some parents don't like this situation one bit.

Ms. McBeth would not talk to us. But here in the studio, Mark Schnepp, who has pulled his two sons out of school.

So you have one second grader and one fifth grader. And they had — they knew this guy, right, when he was a man teacher?

MARK SCHNEPP, FATHER: Yes.

O'REILLY: They had him? And was he an OK teacher?

SCHNEPP: They didn't actually have him, but as the classes all gather together for lunch and recess.

O'REILLY: So they saw him around?

SCHNEPP: Absolutely.

O'REILLY: Did they have any impression of him at all?

SCHNEPP: A lot of the kids liked him.

O'REILLY: OK. So there wasn't a problem with him when he was teaching as a male?

SCHNEPP: No.

O'REILLY: So he shows up as a female, and why did you pull the kids out?

SCHNEPP: Well, he actually hasn't made it to the classroom yet, but it's just way too much for these kids to handle.

O'REILLY: Did you talk to your children about this?

SCHNEPP: Yes, I did.

O'REILLY: And what did they say?

SCHNEPP: The older one, the 10-year-old, he's got a grasp, but my 8-year-old is just totally blown away, and he can't handle it.

O'REILLY: Well, you say he can't handle it. Give me an example of the conversation. What would he say to you?

SCHNEPP: He told me he was frightened by this person.

O'REILLY: Frightened of the...

SCHNEPP: Of the teacher.

O'REILLY: Of the woman now, she's a woman now.

SCHNEPP: Yes.

O'REILLY: So he said, "I'm scared of her?"

SCHNEPP: Yes.

O'REILLY: But he didn't see her.

SCHNEPP: I'm sorry?

O'REILLY: He didn't see her, though. He wasn't around?

SCHNEPP: Well, he's seen her in the newspaper.

O'REILLY: OK. So he's — now, are kids talking about this thing?

SCHNEPP: Absolutely.

O'REILLY: All over the neighborhood and stuff?

SCHNEPP: Well, I got a call from a parent. It was yesterday that, she was broken down, in tears, telling me that the talk on the playground is about how much it would hurt to have your penis cut off.

O'REILLY: The kids are talking about this?

SCHNEPP: Yes.

O'REILLY: All right, so you take your two kids out. That must have been tough, because they have all their kids in the school. Right?

SCHNEPP: Absolutely.

O'REILLY: So it's a tough decision. Why did you make it?

SCHNEPP: Because they can't handle it. I feel it will have harm to these kids. I'm not worried about them being gay or what have you. But the fact is when you overload a brain with too much information, there's potential for harm.

O'REILLY: Did you say this to the school board and to the principal of the school?

SCHNEPP: Absolutely.

O'REILLY: And they said what?

SCHNEPP: They said they were bound by the law and an oath to uphold the law, that there's nothing they can do.

O'REILLY: Why couldn't they just transfer this teacher to another district, where they wouldn't know he was a man?

SCHNEPP: Well, perhaps they asked, but things happened in executive session that I'm not privy to.

O'REILLY: Did you buy their explanation that legally they had to put her back in the classroom?

SCHNEPP: So far nobody's been able to prove them wrong.

O'REILLY: All right. So you just said, "Forget it. I'm going to send my kids to another school"?

SCHNEPP: Right.

O'REILLY: You know, I would have done the same thing, if I were in your position. Because I agree with you. An 8-year-old particularly can't digest this kind of situation and shouldn't have to.

SCHNEPP: I wouldn't think so.

O'REILLY: No, I mean, you're in second grade. You should be in second grade, not worrying about transgender.

All right, Mr. Schnepp. We hope it works out for you and your family. I'm sure it will. We appreciate you coming on.

SCHNEPP: All right, sir. Thank you.

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