Two employees of the Enoch Cree Nation school west of Edmonton say they falsified documents to get extra money from Indian and Northern Affairs.
The employees, a teacher and an administration assistant, told CBC News school administrators asked them to falsify attendance records and enrol fake students into a federal grant skills program.
They say they were afraid of being fired if they refused.
"I was given ... instructions from the principal and the vice-principal to sign registrations for parents of students that were not going to the school," said Micheline Papin, administration assistant at Kitanskinaw School.
"I also tampered with attendance to make it look like the students were attending the school."
The school receives funding of $5,000 to $8,000 per student, she said.
Papin said she falsified the attendance of 25 non-students over the last three years.
'It was wrong'
"I kept a blind eye to it," she said. "I knew that it was wrong, but I still went ahead and did what they asked me to do."
Teacher Dawn McCree said she was asked by the vice-principal in April 2010 to fill out forms enrolling 18 students into a federal skills development program at the school.
None of the 18 people were actually in the program, she said. McCree estimates the fake enrolments earned the school $48,000.
"I sat on it and sat on it and I’ve been under this duress for the whole year wondering what do I do with this," said McKee.
Both McKee and Papin said they did not know what happened to the extra funds.
Last week they took their allegations to the band council.
"When I found out about it, my heart fell right to the ground," said Chief Harry Sharphead.
"To me, it was black and white," he said. "Termination or suspension without pay pending the investigation."
But the council was split on the motion and nothing was done.
The vote disappointed the chief and shocked the employees who made the allegations.
"The decision … that chief and council have made did not stand by us, did not back us up," said Papin.
"They expect us to go back into our community school and work with these people that we brought information forward.
"It’s something I can’t do," she said.
Band members rally in support
On Monday, about 75 band members filled the band office in a show of support for the employees and to challenge the chief and council.
One mother, Joanne McDonald, whose son was falsely enrolled into the work program, said she worries he might be hurt by the allegations.
As an artist, her son Zachary will likely one day have to apply for a legitimate government grant, she said.
McDonald is worried he might be blacklisted for something he had nothing to do with.
"Everything will be questioned and it's not fair because there are a lot of good people that deserve the grants," she said.
Sharphead said both the RCMP and the band are investigating the allegations.
"We are doing everything we can to ensure that the school continues to run smoothly while we investigate further," he said.
"The ones that are really going to suffer are the students if we don’t address this quickly and properly."
Indian and Northern Affairs told CBC News since no official complaint has been filed, it considers the allegations an internal band matter.
A CBC reporter went to the school to speak with the principal and vice-principal, but was asked to leave the property.