I want to first thank everyone for your helpful comments. I read it now and I am surprised nobody told me how ridiculous I may have sounded. After a hectic week where everything was going wrong and going on 7 days straight of work, this whole thing threw me over the edge. Everyone had extremely helpful comments though and I really appreciate it.
I went with my husband and we spoke to the director. She waived everything we were showing we owed and said that she would not charge us, she says she remembers some of the conversation and remembers the figure $137.60 being said. She said they were under the impression that was the rate for only Emma and I was under the impression it was both. She said that they had 2 accounts for us, when they switched to a new billing system it put up 2 accounts for us and originally was showing we owed like $1800. I gave her my bank statements and she put our balance at 0. I did get copies for my records showing this.
She said she can't go as low as it was and I told her that was fine. She did lower it to $210 a week, which I was fine with. I had expected to go back to the $228, so the fact she was willing to work with us and the fact she understood we were not trying to cause any issues with our payments. We've never paid late and we do not choose random amounts to pay, normally. I told her that after every payment I make from here on I would like an itemized statement, 1 for my records and 2 for my flex spending account. She agreed and gave me her email and said that with the discounts she gave it would be hard to go over rates with anyone else and from now and if we have any questions to email so we can have the emails for our records and so we will deal only with her in regards to our account.
So no, I will not drag my kids out of there. I am glad everything was resolved because when I picked them up today my 4 year old told me "I had the best day today at school, I feel happy." Kind of hard to even think about making him leave after that!
Again, thank you for your helpful comments. Yes, I will be getting everything in writing from now on.