Yeah, it doesn't take two years to notify the authorities (though it might take the authorities two years to move on it!) -- and it doesn't sound like they were delaying that notification for the sake of the child, or anyone else, so they've got no excuse, IMO.

I know that funding is tricky business, but I still think that at the very least they could've had her in school part-time. It's possible to homeschool a child with special needs, it's not possible to do so if you don't have any resources to back it up (regardless of the parents' background and abilities) -- so if they could even have offered some help in that regard, without having her as a regular student (which is what happens in some regions with homeschool kids of any stripe), the cost might've been lessened, and she wouldn't lose two years of education. As it is, who knows if she can make that up?