A Brooklyn public school was run into the ground by a principal who left it more than a $100,000 in debt by wrongfully inflating payroll, misusing funds and using a fake bidding process for purchase orders, the schools prober said yesterday.

Special Investigator Richard Condon said Maria Penaherrera mismanaged funds at PS 114 in Canarsie before being reassigned in 2009.

The Education Department said it planned to fire Penaherrera based on the findings.