Jill-
With a 98th%ile on the arithmetic is a gifted score. The verbal and arithmetic scales, according to the GDC, are the 2 highest indicators of intelligence. That means that either of those scores are pretty accurate predictors of ability. The perceptual reasoning scale is a close 3rd. A score of 98th%ile would transpose to 2 standard deviations above the mean, or about 130.
If there are discrepancies in the scales, and they are not from the kid goofing around, then the scores indicate learning disabilities. Further testing is warranted.
I'm curious which scale was the 40points lower one? If it was processing speed, imu, that's common in gifted kids.
My son scored in the 99th%ile on the VCI (verbal) scale, but in the 6th%ile in PSI (Processing Speed)!!! Further testing has shown he's quite bright, as the VCI indicates, but has pretty severe learning disabilties. We wanted to be thorough in understanding his needs and as such had him get a neuropsych. eval, a SIPT (sensory integration and praxis test) a trial of ADHD medication (because tests implied he had ADHD), a physical therapy evaluation and so on.
As far as getting the district to consider him for the gifted program, that's going to take some broad based advocating. You need to get that policy changed at the district level for ALL kids, imo. Have you connected with any gifted associations in your state?