(Aside: This is the result of the "every kid must have at least one year of fine arts in middle school" law, so yes, they have to be in your class if their IEP counter-indicates being in any of the other options (if they exist) at your school.)
Go with what some of the people said below, but remember that your job is to place them in a minimally restrictive environment (Special Education law says so). Find ways for them to "participate" in the fashion that this kid can do so. Whether or not it impacts your contest scores is not the purview of the law. Find ways for the kid to be successful.
Of course, as someone said, define "success" first in a separate ARD meeting with the kid, the parent, and the teachers. If they attempt to have the meeting without the parent involved, ask for it to be rescheduled or the parent to teleconference in. Often, changes like this are made without the parent's knowledge or consent. Get mom/dad on board with what you're doing, and you'll be fine.