The 66-year-old appeared before the Parole Board earlier this month.
He apologised for his offending, and claimed an understanding of the consequences of his actions, a report, released to the Herald this afternoon, said.
He had been transferred to a different facility earlier this year, to undertake steps recommended by a psychologist.
However, "nothing else seems to have been achieved", the board said in its decision.
A basic safety plan had been drawn up, but Dredge "continued to demonstrate little insight into the causes of his offending".
Dredge "would require psychological treatment to improve his understanding before he could develop a meaningful safety plan", the board determined.
The board was also concerned about finding suitable accommodation should Dredge be released.
It ruled there was too much risk to grant him parole.
"As things stand we are unable to be satisfied that risk is other than undue, and we say that having regard to the available risk assessments, including through the psychologist."
He will be eligible for parole again in July 2017.
The victim's family were opposed to Dredge being released before he has served his two year sentence.
Her mother told the Herald it was "a great day" when Dredge was denied parole.
"We are relieved that the Parole Board denied Dredge parole this time around, and that he will remain in prison for at least another seven months," she said.
Following Dredge's conviction the Ministry of Education vowed to install CCTV cameras in all ministry-contracted special needs vehicles.
However, the Herald revealed earlier this month that the roll-out has yet to happen.
Half the cameras are expected to be in place by the start of 2017 school year, with the second half rolled out by the start of term two, the ministry said.