My thought on this would be that it might be time to redefine the structure of your classroom. It doesn't really sound like you believe in a punitive environment and yet your classroom is set up with that as a base. Is the level system a school thing or a classroom thing? If its a classroom thing decide if you want to continue using it (you are the teacher and can decide this if it is a classroom thing). If it is a school thing and you must keep it in place, define how it works in your classroom, make some rules and create visuals on it. This might include things like students only drop one level at a time, students must explain to you why they are dropping the level and what they need to change as they go to the chart and drop their name...etc. Basically whatever works for you but my feeling would be that it is very important for the student to know why they are dropping a level. In this I would include information about how people talk with and treat others in the classroom (talk respectfully, no physical interactions...etc.). I personally would also add in some type of reinforcement system that would be created dependent on the functioning level of your students. An example might be a token economy where students can earn classroom dollars and then use the money to buy little things and/or earn privledges. Within this system I would not have punitive measures (taking things away). Once you have a good idea of how you want your classroom to work and a couple of systems in place that will bring you closer to having your own room then I would sit down and talk with the para before you present all of this to the students. Outline how your classroom will work and what her role will be in that. Ask her if she has concerns about any of it and stand firm on the things that are completely necessary in your mind (no hitting, students understanding why they drop levels, respectful talk...etc. whatever they happen to be). If there are things that she is having a hard time with that you can bend on then find a middle ground. There will be bumps and you may have to meet from time to time and evaluate how things are going. She may end up having some great suggestions for how to make things work. Don't feel that you have to come up with all of it on your own but you do need to feel comfortable with the way things that are done in your classroom. The hitting with the rule I would say in no uncertain terms it is unacceptable and would also report to your admin that this has been happening and that you have told her it needs to stop. Your admin will tell you if anything else needs to be done.