The parents brought the case over the council's 2018/19 budget, which highlighted possible savings totalling £21m to its schools and special educational needs and disabilities funding.
They claim the proposals were made without consultation but in a ruling this week, Lady Justice Sharp, sitting with Mrs Justice McGowan, dismissed their claims, saying the council did not have a duty to consult as it was only identifying possible savings in its budget and had not made any decision at that stage.
"In simple terms, the budget is part of a lawful local government accountancy process that identifies how savings might be made, but the budget is not set in stone," said their ruling.
"What the council has identified is the potential for future savings. To put it another way, the council has identified areas of spending upon which it proposes to concentrate as the potential areas in which savings could be made.
"In those circumstances, the council could not know what the impact of cuts might be in those areas, or consult on them, because at the time the decision under challenge was taken, no cuts had been decided upon or worked out."
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The parents' claim was originally related to a possible £21m worth of cuts to SEND funding, but was later focused on £11.7m of potential savings, in areas such as commissioning and inclusion.
Those taking the action included Alicia McColl, whose teenage son Kian Hollow is autistic and has attention deficit hyperactivity disorder. He is supported at school with transport and specialist help including one to one and group therapy sessions.
The other parents involved are Sarah Jones, whose four-year-old son Kyffin Carpenter has a rare neuromuscular condition and needs help at his nursery, and Debbie Butler, whose children Zoe and Sean both have special needs.
Also involved in the legal action is Catriona Ferris, whose teenage son Dominic depends on school transport and attends a specialist SEN school.
A statement from the families' solicitors, Irwin Mitchell, said that the parents are considering appealing the decision.
While the council has not implemented any of the potential SEND savings there are still concerns that funding could be cut in future years, says the statement.
"This case does not mean that future decisions to cut budgets and services cannot be challenged - each case must be considered on its facts," said Anne Marie Irwin, senior associate solicitor at Irwin Mitchell.
"It is important that families seek legal advice as quickly as possible if they are concerned about the impact of a decision or policy by a public body.
"What this case and other cases around the country have highlighted is that cuts to SEND budgets and services are causing a great deal of distress to tens of thousands of families.
"It is an issue which is likely to become of increasing concern as the new financial year, during which local authorities face continued budget cuts, approaches."
Julie Iles, Surrey County Council's cabinet member for all-age learning, said: "We're pleased the court has confirmed our approach was appropriate but we recognise the case has been difficult and sensitive for the families involved.
"We're investing in the services provided to children and young people and our focus has always been on working with families to improve what is offered. Our aim is to give families the support they need at the earliest possible opportunity which will offer children and young people the best chance to thrive, ensuring that no one is left behind."