The Grove Academy is one of five pupil referral units (PRUs) in North Yorkshire which are facing a cut of £2.7m to their services.
The schools teach students who have been permanently excluded or who cannot be taught in mainstream schools.
The school has criticised the proposals by North Yorkshire County Council as coming in too fast and taking away too much funding, forcing the school to close.
But Harrogate and Knaresborough's MP has encouraged North Yorkshire County Council (NYCC) to talk to the school to see if they can reach a joint solution.
He said: “The main issue is the education of children who, for whatever reason, are unable to be educated in what is traditionally viewed as mainstream education.
"I can understand why those who have benefitted from the PRUs, their families and their friends will want the PRUs to provide that.
“I met the Director of Children’s Service from the County Council last weekend and I have also discussed the issue with staff at the PRU. Both agree that the education of children is the main priority and both now seem to agree that alternative models to the current one can provide that quality education for excluded children.
“Everyone agrees too that it is better to prevent the exclusion of pupils in the first instance and the County Council claims that their scheme can do that.
"And everyone agrees that there has been a significant increase in the number of pupils schools are excluding in recent years.
“So there is much that is agreed. The main sticking point seems to be not that change is required but the pace of that change.
"The County Council have already moved from reducing discretionary funding for the service in one year to reducing the funding over two.
"The PRU says that it is not possible to alter their model over that timescale and that they need three years.
"Even at this late stage I would encourage the PRU and the County Council to talk to find out why they have reached different conclusions about what is possible and in what timescale and how those two different conclusions might be combined to produce a joint solution.
"There should also be a discussion about how funds held by PRUs can be utilised to facilitate changes to the system.
“To many, it seems that there has been a rather confrontational approach which for some time lost sight of the main objective which is to keep children in mainstream education and prevent exclusions.
"I don’t apportion blame to either side of the debate; it is a very emotive subject. I urge though constructive discussion whatever decision is taken by the County Council at their forthcoming budget meeting about how best to make whatever funding is available meet that objective.”