Otago Boys High School rector [principal] Clive Rennie said the skiff was full of year nine rowers returning to shore, and senior rowers went to assist.
He said the accident took place on calm water not far from shore.
Practice had almost finished and the novice crew, all year 9 students, were returning to shore when the incident happened.
"Most of the kids are fine. There were three that were initially put into hospital. One's been discharged, the other two are still in hospital, one for observation. The boy who took the biggest hit has some ongoing issues," he said.
"I spent the whole day making sure the boys in the crew have been well looked after and the other boys who saw what was happening, making sure they've had plenty of support.
"We're proud of the senior boys and the way they reacted. There was a good group of parents there."
Mr Rennie said Fred Strachan, the rowing coach, had returned to his home outside Dunedin. "He's very upset about what happened and we're trying to make sure he gets plenty of support."
Mr Rennie says the school is also likely to run its own investigation into what caused the accident.
Senior Sergeant Dave Scott of Dunedin Police said a 12 year old male had serious arm injuries caused by the propeller potentially, and was taken to Dunedin Hospital.
Mr Scott said police collected information for Worksafe NZ and Maritime NZ, he said.
"We documented the incident for other agencies but it's just not a police matter."
Otago Regional Council harbourmaster Jeff Donaldson said it was unclear which parts of the boat collided.
Mr Donaldson said the eight man skiff was "very low to the water" and was hit by an aluminium Stabicraft with a 40 horsepower outboard motor.
