Reading? Or not?

I do not know if this is the correct area to post my question, but I could really use some advice. I am the foster parent of an almost 8 yr old special needs child. We have had him for 10 months. We are having a problem with the school acknowledging our concerns. The school says that he is reading 'up to par'. While we do acknowledge he has made significant progress since being placed in our home, we do not believe he has made as much progress as the school claims. For example: The school says he can read bc he gets 100s on papers that the teachers help him with. They also only work on the same words every day. They never deviate from these words. I contend that he is not really reading because he may get the word right, but will also give that word when presented with the flash card of another (sometimes completely incompatible) word. For example, he can 'read' Green but also gives green when asked to read the word Bag, Grow, and so on. He does this for almost every word that he comes home with. The teacher says that this is common. I contend, however, that he is not truly reading, but merely associating with what he remembers from the word (Which is definately progress!!), or merely guessing. Something else that bothers me is that when asked to read he often times just throws out an answer (very rarely it is right). If he is incorrect I ask him to sound out the word. This improves his accuracy greatly but we also have noticed that he will sound out the individual letter sounds correctly (Yay!!) but then when asked to put the whole word together he says a totally different word. The teachers do not seemed concerned about this. I am concerned he has dyslexia or apraxia (on top of an IQ of 51). Should I be concerned? I have been trying to get the school to take heed to my concerns for the whole year now and they are not listening. What can I do? He also has troubles in math and language/communication that they seem to be downplaying. I do not have much experience dealing with schools or IEPs so any advice would be greatly appreciated!!