@kvida92,
Quote:What do you guys think? I don't want to call CPS unless I know for sure that my nephew can live with me or my mother, and that the other two will be placed with their father
I certainly understand your distress regarding the situation with your niece's children, and you would be fully justified in notifying CPS regarding her neglectful behavior--and her neglect encompasses medical neglect, physical neglect, and apparently, educational neglect, if the school has threatened to call CPS.
I'm not sure that you can be assured that CPS will place your nephew with you. For one thing, they might not move to remove the children from her care. The situation you describe is not one in which the children are in imminent danger from her, or one in which they are at serious risk of physical harm by her. It's more of a chronic, long-term, pattern of neglect you describe. They are more likely to remove children who are at high risk due to physical or sexual abuse, or extreme neglect where the children are malnourished or starving, not being bathed and dressed properly, or where the caregiver appears too mentally or emotionally disturbed to care for the children etc.
CPS might choose to intervene in a way that mainly addresses the neglect, but leaves the children in her care, but under their supervision.--they should make sure the children are medically evaluated, and receive ongoing medical care, that they are provided with enough to eat, that the 3 year old receives evaluation for pica (the paint eating), and possible speech delay, make sure the 5 year old attends school regularly, make sure the children are not emotionally abused or subjected to harsh discipline, etc. and if they can provide those sort of interventions, and monitor your niece's compliance, and have her attend parenting classes, and, if necessary, therapy, they might choose to leave the children in her care, at least temporarily. Removing children from the home is generally the last resort--unless the situation is urgent.
What you might do, is find out if your state has kinship foster care
http://en.wikipedia.org/wiki/Kinship_care
If it does have that arrangement, look into how you might get the training to qualify for such an arrangement. You could even call CPS just to ask them about that, and how you could go about applying. Under such an arrangement, you would receive a stipend to cover the costs of caring for your nephew, and some compensation for your services as a caregiver. That might even allow you to continue your college courses, if he came to live with you under such an arrangement.
You know your nephew will be with you over the summer, so he will be out of the environment he is now in for that period of time. But the welfare of the other 2 children is a concern, particularly because you cannot locate their father. Qualifying for kinship care, by you, might help to assure long-term placement of your nephew with you. And nothing you've said about yourself would make you ineligible to care for your niece's children, including your nephew, on even a short-term emergency basis, if CPS were to want to immediately remove the children from her care--they much prefer to put children with close relatives, rather than in foster care.
So, I don't think anyone can tell you in advance exactly what CPS would do. My guess would be they would not remove the children from the home in the situation you describe, because it's neglect rather than abuse, but they would investigate and probably intervene in some way--particularly if you also ask your nephew's school to also report your sister, based on her failure to get him to school regularly.
Should you call CPS? Yes, I think you should. But no one can tell you in advance how they will handle the situation--they have to investigate it first. You might consider waiting until your nephew is with you for the summer, and then call them regarding the other 2 children. Then it might be more likely they'd leave your nephew with you, if they decide to remove the other 2 and place them in foster care if they can't immediately locate the father. But I really think they won't remove the children from her care, unless their investigation turns up indications that the children aren't safe with her. In neglect situations that aren't life-threatening or extreme, they'd most likely leave the children in their home, and intervene to make sure the neglect is stopped, and try to help her get her act together. But, you never know...