Inspectors blamed the headteacher and warring governors in their report on the long-running battle at Manton Junior School this week.
Pupils received an "impoverished education" caused by ineffective leadership and poor financial and strategic planning, the local authority-appointed team said.
Inspectors identified "serious weaknesses" in the school's discipline procedures which emphasised punishment rather than encouraged good behaviour. Teachers were split on how to manage difficult behaviour.
Inspectors found there was no agreed policy for dealing with the school's escalating bullying problem, and the school had broken the law by failing to record informal pupil exclusions. The report suggested the school draft a behaviour policy, train staff to deal with problem pupils and improve breaktime supervision.
The report on the Worksop school was ordered by Nottinghamshire County Council after parent-governors opposed teachers' attempts to remove a disruptive 10-year-old boy. Months of conflict ensued, the school closed down for two weeks, and governors resigned, but eventually Matthew Wilson, the problem pupil, was sent to another school.
The report calls for clear guidelines on the relationship between governors and staff, which it said had been characterised by "mistrust and lack of information". It added: "Very significant changes are required so that all can work together to establish a common purpose."
The 30-page report, based on interviews with Manton teachers, said that too much power rested with the head, Bill Skelley, at the expense of governors, some of whom had overruled Mr Skelley's decision to exclude the boy.
The report said management was spending too much on staff and called on governors to strike "an appropriate balance between staff and non-staff costs to provide greater flexibility in the use of resources".
The National Union of Teachers, of which Mr Skelley is a member, said he was being made a scapegoat by the local authority. Doug McAvoy, NUT general secretary, accused Fred Riddell, chairman of Nottinghamshire education committee, of wanting to "put a non-stick coating around the authority which failed to meet the crisis caused by the governing body's obduracy".
Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, said the findings placated his eight members at the school. "The report confirms my impressions that classroom teachers were doing a good, competent job in difficult circumstances," he said.