"Ngāti Whakaue give over $1.4 million per annum to education. It doesn't make sense for us to continue giving that level of funding when the response to setting up our own school is to handicap us with such a low roll," Bennett said.
"Our aspiration was for a school that would grow to 300. They have not even given us a chance.
"We're extremely disappointed. We believe we've been sold out by officials and politicians. They know we have demand for our school that we are distinct and that we have potential to be successful."
Bennett said the trust would meet to determine a way forward.
"We're going to take this back to the Government. This is not good enough."
She said the school staff were working with whānau to make sure the school continued as normal.
"We're iwi, we'll be here long past this Government, long past this policy. So we're going to keep going but we're very disappointed in the Ministry of Education and the Minister of Education," she said. "They've got it wrong. How can they do this to Ngāti Whakaue?"
The Ministry of Education's deputy secretary of sector enablement and support, Katrina Casey, said she understood 75 was the site capacity at the school.
She said the decision also took into account the local schooling network and the school could, in the future, submit an application to increase its maximum roll.
She said the addition of Te Rangihakahaka as a "high-performing bilingual school" would add to the opportunities for Māori students, not handicap them.
"The minister has made the decision about the details of the establishment of [Te Rangihakahaka] based on a number of factors including both property capacity and the local schooling network."
Education Minister Chris Hipkins said he had appointed an Establishment Board of Trustees at the school and other new special character schools.
"They include members of each charter school's governance board, to provide continuity and support its character,"
Sir Toby Curtis, an education advocate opposed to closing charter schools, said he was happy the school would continue as a designated character school. "But I can't understand why they've cut back the roll."
Curtis said Te Rangihakahaka would easily fill 300 seats if it could.