Considering what Islam teaches about gender roles in society, I think it's for the best if the school closes and the pupils attend local secular schools.

Like so many other people who represent themselves as role-model religious institutions, those in charge demonstrably don't act on (and by extension, don't believe in) one single moral lesson which they preach.

There's no good reason (other than an economic, cost-shifting one) why our govt gives any funding at all to religious schools of any denomination. These are private schools, operating on a private business model. They should either be able to make a success of their business or quietly close down and fade away and cease demanding that our tax dollars provide them with a subsidy.

And I also wonder; if the money wasn't spent on the education of the children, what was it spent on?

If it's our money (our taxes) then we have the right to know how and where it was spent.