Demonic possessions are "STILL" a thing? Not to be a dick, but to quote OP: "I'm sorry, but what century are we living in?"

answering this just for the fun of it: Yes, but it needs a variable of classic behaviors and unarguable points of proof, such as speaking a different language unknown and unlearned, changes in voice and body transformations of which is also know to be unlearned- as in bending backwards without breaking the spine, change in eye color that is "dramatic" and without outside interference, same with hair color, incredible and unexplained spontaneous strength that is untrained, strong personality and behavior change that is diagnosed as unknown by psychological testing and bloodwork - that is generally violent and hateful. I will also add that it takes almost all of this and more to prove as many "disorders" can mimic most of these. And, as some children are child prodigies with music or art some can also pick up languages and even if they are violent they can be just simply be...a genius. Many sociopaths are..

One: Depending on school size, budget, and amount of effort towards proper schooling, there is likely only one Alternate Needs class. The highschool I went to had a population of 1400 and there was STILL only one AN classroom. They filled the room over capacity and the rest of the students in that group were kept in the same place that in school suspension was held. Two: If one teacher is so ridiculous as to call a student possessed and believe it, chances are that the other teachers for other AN classrooms are just as incompetent. Three: It is a really dumb idea to leave a child in the same school as someone who has delusions that said child is possessed, even if they aren't in the same classroom anymore. Saying that the person was possessed was and still is a fairly often given 'justification' for murder, assault, and battery. Even if the teacher isn't so ungrounded as to do that, chances are that she would slander OP's son to other teachers and students, or otherwise target him socially. Except then she would also be targeting him for whatever punishment she did get. Four: Even if the teacher got fired, it would be very easy for her to paint herself as the victim, and urge students to harass OP's son. This is especially possible if she is a popular teacher. Just because something is the less troublesome option short term doesn't mean it is the better option longterm. I highly doubt OP is moving her son from the school because she is JUST uncomfortable. Even if it is 'just' discomfort, I wouldn't trust the school to keep someone as ****** in the head as this lady away from my kid.