Some (not all) school districts will use the ED designation as a threat because the place they send ED kids is usually not pretty.
Most ED kids are sent off campus to a "special school". These are kids who need extra TLC and may not be in complete control of their emotions or physical behavior, and it's not their fault, just saying that it would be a hard environment for a LTFA kid to be in...especially coupled with anxiety.
SPED directors know most parents want their kids to remain with "typical" peers, and that most parents would cooperate with what the school wants to avoid the ED designation.