Your question addresses the decision by the private school that your child attends, that they can not accommodate her and will not allow her to return next year.
It is wonderful to hear about AUST working with parents to develop a program for students with disabilities. No doubt, collaboration between the two entities will enhance the process.
Students with varying disabilities, representing a wide range of age levels, can be taught very successfully when grouped together, provided the teacher has significant training and assistance.
Mastering phonemes is the gateway to reading. Though some children begin recognizing sound-symbol patterns just through exposure to books, many children need direct instruction in this area.