"Halswell Residential College in Christchurch will provide co-educational services for learners that have complex needs associated with intellectual impairment," she said.
A new intensive wrap-around service in every region would allow learners with complex needs to remain in their community and attend their local school.
"The proposal comes after consultation with schools, parents, students and the community which highlighted the importance of residential special schools for some learners and their families," Ms Parata said.
The money saved in closing the two residential schools would be redirected to the community-based service.
"The net result will be better support for more learners, and keeping communities together."
Schools have 28 days to comment on the proposal before a final decision is made.