The joint inspection team, from Ofsted and health watchdog the Care Quality Commission, found that pupils with SEND make weak academic progress, attend less often and are excluded more frequently than other pupils in Birmingham and all pupils nationally.
"Not enough young people who have SEN and/or disabilities are entering employment or supported employment," a letter outlining the findings states.
"The proportion of adults with learning disabilities in paid employment is below the national average."
Inspectors said leaders have not ensured that the 2014 reforms have had a marked impact on improving provision and outcomes for children with SEND.
"Until very recently, health, education and social care teams have not worked together effectively at a strategic level," the letter states.
"As no one has taken a clear and cohesive overview of provision and outcomes for children and young people who have SEN and/or disabilities, the local area has not implemented the reforms effectively."
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Inspectors also said that the quality of education, health, and care (EHC) plans, which replaced SEN statements as part of the 2014 reforms, is variable.
"Some are good but many of them are poor," the letter states.
"They tend to focus on short-term educational outcomes and contain little information about health and social care needs and provision. Outcomes are not sufficiently aspirational or measurable."
Joint commissioning was also found to be "significantly underdeveloped" across the local area, with professionals unable to identify or articulate a clear view, either individually or as a partnership, about their main priorities for joint commissioning.
Ofsted has said a written statement of action is required because of significant areas of weakness in the local area's practice, with the local authority and the area's clinical commissioning group (CCG) jointly responsible for submitting it to Ofsted.
A joint statement from Kate Booth, lead member for children's wellbeing at Birmingham City Council, and Dr Richard Mendelsohn, chief medical officer at NHS Birmingham and Solihull Clinical Commissioning Group, said: "We are very disappointed with the findings of the recent inspection of special educational and disability needs services in Birmingham, which we fully accept.
"By working together in close partnership, we are committed to ensuring better support and outcomes for our local children and young people, who have special educational needs and disabilities.
"The report has highlighted several areas of strong and positive practice; however, a number of significant improvements urgently need to be made. This work is being prioritised by all organisations involved, to ensure a clear focus on improving standards and addressing the concerns that have been identified."