What happens when SN kids can't handle public school?

Anyone know what happens when a special needs student can't handle public school, specifically in NYS?  My son in 5 with an ASD dx, PPD-NOS.  He is on his third week in kindergarten in an 8:1:1 class, currently there are only 4 students in the class.  Today was the third time this week I had to pick him up from school for behavior/safety issues, specifically he is hitting and kicking staff.  Today he BIT his teacher in the first hour of being there.  He isn't known to bite! 

When he is brought home, he is not being rewarded.  We have been very firm that when he has to be removed from school, at home he is not allowed to play outside, no computer games, he has to miss karate class and any other special activity we had planned, make up any work he missed and limited TV based on good behavior.  Today he was removed from school by 10am, he has been defiant and trying to injure me all day.  As a result he has spent about 90% of the time in his room for time-out. He even put a hole in his wall.  I also have a 3 yr old who just can't leave him alone who has also spent about 70% of her day in time-out because she wont leave him alone.  I lost my temper with him twice today, once before we even got home when he chucked a hard cover book at me in the car hitting me in the neck with a corner! 

Because it was so early, I started with opportunities to earn things back with good behavior, but it failed.  He just could hold it together and refrain from trying to injure myself or his sister.  We had a social worker who used to come to our house to deal with this sort of behavior.  We have tried social stories, charts, reward jars, do overs (big mistake), just about everything.  While they tend to work for a few days, he begins to attack them and intensionally disobey them after a short time causing worse behavior than we started with and had to be discontinued.

 This is actually his third year of school, he spent 2 years in an integrated preschool.  He had some problems but overall did OK.  By mid-year last year he was doing great and making it through most days with no problems and he was almost put into a regular kindergarten class.  Things were going well at home as well.  But then this summer we had huge set backs, my son was the kid forced into and strapped to a wooden Rifton chair by an aide during a tantrum for those who remember.  The summer staff did it because they decided the comfy-cozy room was a reward to him.

His current school staff is really bending over backwards trying to work with him.  He has some great days where he is actually the most behaved kid in the class, but the bad days are really bad.  His OT was removed from this year's IEP because the staff from preschool didn't feel he needed it, I disagreed and fought it so they added a bi-monthly consults.  They have been working everything they can with the consults (he is actually seeing the OT and they are doing a sensory diet) and getting it back on his IEP.  They have set up reward systems to suppliment the existing behavior system but are having the same results as I have in the past.  Goes great for a few days then he attacks it and this week's behavior is in part fighting the systems.  Before going to the principal, the room teacher calls in the psychologist, the social worker (same one who came to our home) and some times the OT.  My son has no fear of authority or bigger, older people.  He is known to take on 13-14 yr olds who say things to him.  He has no fear of the principal.  He laughs when I or my husband loose my temper.

I know tomorow at school is not going to be better.  I don't know how long before they remove him from the school.

Sorry, I know I am not a regular on this board but am in and out.