Does satire have to be funny? Satire had always been treated as humorous criticism at my middle school, but now at high school, they say it is just criticism hidden within a story. Which is correct?
Not necessarily, but it can be.
Satire is characterized by its use of irony, exaggeration, ridicule, or humor. So, while the end result may (and likely will, in the right context) merit at least a chuckle, that isn't necessarily the original intent, and it certainly isn't the point. (By "the point," I mean the reason literary scholars/your teachers want you to read it. i.e. you aren't being told to read Huckleberry Finn because you might find it funny; you're being told to read it because it's important for you to understand what Twain is saying about society and learn to appreciate how he's saying. The fact that it may also be funny is mostly tertiary.)
The reason the definition of satire seems to have changed slightly is that it's not hugely necessary for middle schoolers to grasp all of the intricacies of satire, as they likely won't be looking at very complex or in depth examples of it anyway. In high school, you're expected to be able to analyze works on a deeper level, so merely describing it as "humorous criticism" doesn't really cut it.
In effect, they're just trying to make you a better scholar. If you have any more questions on satire, try perusing this page:
(That website, by the way, has in depth definitions and examples for any literary term you care to name, so I highly suggest you bookmark it for future reference.)