We study three basic welfare axioms for school choice mechanisms with a reserve or quota-based affirmative action policy, namely non-wastefulness, respecting the affirmative action policy, and minimal responsiveness, and show that none of the previously proposed mechanisms satisfy all of them. Then we introduce a new mechanism which satisfies these three axioms. This mechanism issues immediate acceptances to minority students for minority reserve seats and otherwise it employs deferred acceptance. We analyze the fairness and incentive properties of this newly proposed affirmative action mechanism and provide possibility and impossibility results which highlight the trade-offs.