Verney Road School principal Angela Buxton said she had her "fingers crossed" the government would commit the money, but it hadn't been an assurance.
“It's really fantastic for the whole school community . . . it's an opportunity for us to look after our families and our students,” she said.
For decades, the school has provided an education for children from age two to 18 with mild, moderate or severe intellectual disabilities.
More than 240 students currently attend the school.
Ms Buxton said the use of the funding was still in its "planning stages", but the investment would go towards "future provision" of the site.
“It's a lot of money, there's no hidden agenda,” she said.
“It's really exciting, it shows the government's commitment to inclusive education.
“We can absolutely scope out the best way to fund our specialist kids with disabilities into the future.”
The funding forms part of $1.6 billion in the Victorian Budget for school infrastructure and improvements, with the majority of projects in Melbourne and its outer fringe.
The current Verney Road site sits between Bourchier Street Primary School and the soon-to-open $119 million Greater Shepparton Secondary College, expected to house thousands of students from next year.
State Member for Shepparton Suzanna Sheed said funding for Verney Road School's planning phase was "overdue".
“But I am glad it was funded in this year's budget,” she said.
“I have met with parents and teachers from Verney Road School over the past few years and they have been telling me that the school is in desperate need of a redevelopment,” she said.“It was built when there were less students at the school and it is now overcrowded and not fit for purpose.“I would encourage the school community to engage in the planning process as it evolves.”
There has been no funding for new schools in regional Victoria in the state budget this year, with just 17 out of 52 school upgrades located outside of metropolitan Melbourne.
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