I don't see why their grades in non-band classes would determine their spring band placement unless you are in a district that has their own eligibility rules regarding UIL CSR.

Maybe there is an argument to be made that a lower band would play easier music and free up time for study in other areas, but kids don't think or act that way in my experience. You'd also be undermining the development of the player (and, by extension, your band program) by placing them in a group below their ability level.

Truth be told, if my director tried to demote me because he wasn't happy with my grade in geometry, I'd quit.