The report also claims the school director and other staff failed to investigate the allegations properly and alert social services to possible abuse, as required by law.
Cansler said early findings show "some staff may not have acted in the best interests of our children."
"The findings of Disability Rights NC are significant enough to warrant a full investigation into the actions of the school's top administrator and staff," Cansler said. "We take these reports seriously and we are acting on them."
The department said school director Janet McDaniel was suspended with pay during the investigation, which could last at least 30 days. The findings will be presented to Cansler, Deputy Secretary Maria Spaulding said.
Vicki Smith, executive director of Disability Rights, said Friday she was pleased to see a zero-tolerance policy for abuse promoted by Cansler and Gov. Beverly Perdue has been extended to children at the day and residential school of nearly 100 students in grades K-12. Disability Rights receives federal funds and is obligated to monitor activities affecting people with disabilities.
The group's report demands that McDaniel be fired as director because she "permits and perpetuates acts of abuse by failing to take swift and decisive action to protect students." McDaniel, who has been interim or permanent director since April 2008, didn't return a phone call left at the school or respond to an e-mail Friday.
The report, without identifying people by name, said a student reported in February that a teacher injured her and damaged her personal property and that she was placed in a face-down restraint position, preventing her from using her hands to communicate through sign language. The position is against school policy.
The student said she was assaulted a second time, and the student's mother was the subject of retaliation by one of the teachers who alleged the parent has spanked her daughter.
Other allegations in the report include:
-- a student reported in February a teacher slapped and injured her, but academic staff failed to investigate what happened.
-- a dormitory staff member who in late 2009 pushed a student on his chest and backed him against a wall, constituting excessive force.
-- the male dormitory director repeatedly entered the girls' high school dormitory "unannounced and typically did so during their scheduled shower time" and viewed the video feed from the girls' dormitory when the students were wearing pajamas. The dorm director no longer works at the school.
Overall, the report concluded, "The students at (the school) are unsafe in school and in the dorm."
The investigation comes as the Legislature agreed this year to shift oversight of the school from an office within Health and Human Services to the State Board of Education.