The Indian Affairs Department has confirmed to CBC News that it reduced funding by about $165,000 for the Paul First Nation's school after auditing its attendance records last November.

Glenn Luff, a spokesman for the federal ministry, said the department saved the money when it removed the names of 42 students at the school on the reserve, 60 kilometres west of Edmonton. The school receives almost $8,000 annually for every student, Luff said, but not all the dubious students were registered for the full school year.

The new details support speculation that the school was inflating its attendance, following complaints from former teachers at the school.

In May, the principal, a teaching assistant and all but one of seven teachers at the school learned their contracts wouldn't be renewed for the 2010-11 school year. Chief Daniel Paul was quoted as saying the dismissals were intended to give the school a "clean slate" in September.

But some teachers said the dismissals were in retaliation for grievances they had filed, alleging they had been asked to lie about student numbers and attendance to get the school more funding from the federal government.

'It raises flags'

"We're concerned about the Paul Band," Luff said. "It raises flags through to the department. And you're aware that they've kept the file open, and they want to look at those allegations again."

Indian and Northern Affairs Canada announced June 23 that it would take a closer look at the teachers' complaints. Luff said he had few details on how the allegations are being investigated.

About 250 school-age children live on the Paul reserve but only 90 attend the band's school, which runs from kindergarten to Grade 9. The rest are bused to schools in Parkland County.

The teachers' allegations mirror a complaint by a parent of children attending the school, who came forward in June saying she had been pushed to backdate their attendance records.

The mother, who asked CBC News to conceal her identity over fears she would be ostracized by her community, said she signed a letter stating her children received schooling in September — more than a month before they began classes at the school.

The school, whose administration abruptly ended the 2009-10 year on June 23 — a week earlier than scheduled — is currently in the process of hiring a new principal and teachers.

Calls to the band weren't returned.

With files from the CBC's Andrea Huncar