But at the end of the school year, he still hadn't mastered what he needed to go into sixth grade and they recommended tutoring. My son still hasn't mastered the requirements and they want to retain him in the fifth grade. This would be his third time in the fifth grade. Knowing that he is dyslexic and considering his age and self-esteem, would it be wise to retain him? Or, should I consider looking at other options, such as homeschooling?
Since I have not evaluated your son, I can't say exactly what kind of program he needs, but it appears that what's been offered hasn't been enough. He may need multisensory instruction (that stimulates many different roads to learning). He may need to listen to books on tapes (which he's eligible for as a child with dyslexia), so that he can learn by hearing rather than by reading, which sounds like it's a struggle. He may need other specialized instruction in order to learn up to his capacity.
The same thing goes for homeschooling. The teaching must be specialized (he is taught in a special way that builds up his weaker areas while helping him utilize his learning strengths), and matched to his learning needs. Otherwise, it's as if he's taking the same wrong medication over and over again for a wound that doesn't heal.
Go back to the people who made the diagnosis, and ask them to describe the ideal learning program for your son. If the school can't provide this for him, you may want to consider having him go to a private special school where great gains in shorter amounts of time are more common. If your son's public school has not been able to meet his needs, then they may have to pay the bill for the private school. You may want to talk with an attorney who specialized in special education about this.