Screen Time Passcode being removed on child's device

There are a couple of things kids can do. One is to start Screen Recording and record the passcode when you type it in on the phone. You can tell if the screen is recording by the time on top having a red border around it. You can shut off Screen Recording by going to Screen Time > Content & Privacy Restrictions > Content Restrictions > Screen Recording.

The other thing is to make sure they do not know your Apple ID password, this can be used to reset the Screen Time passcode.

If they have a computer as well, they can reset the phone to Factory Settings. This is the same procedure that you would use if you forgot the Screen Time passcode. If this is the case, you will need to create an Apple ID for your child and not give them the password for it. With Find My turned on, they will not be able to reset the passcode this way without the Apple ID password. With your child not having the Apple ID password, it may restrict some things they can do, such as App Store downloads, but some privileges just need to be earned.

If you find that restrictions are being removed from specific apps, it is possible that they are deleting the app, which removes all limits for it, then reinstalls it. To prevent this, go to: Screen Time > Content & Privacy Restrictions > iTunes & App Store Purchases, and "Don't Allow" the Deleting Apps option.

Two further options

1. confiscate their phones
2. Give up and let them make their own mistakes in life.

They seem to be smarter than you or us.

You are doing it correctly by setting the passcode on your device, although you can use the passcode on their device to make changes and this is where kids have tricked their parents by recording the screen. This does not seem to be a problem in your case.