Further relief came in 1954 in the form of increased federal government financial assistance and direction. Beginning with the 1954-5 school year, Ottawa paid the salaries of classroom teachers at schools that were owned by the government. That step proved to be but the precursor of much more extensive, and more generous, financial involvement by the federal government. In 1957 the department moved away from the per capita system that it had instituted in 1892, adopting a global budgeting system for government-owned residential schools. The advantages of the new system seemed to outweigh the bad, although through the later 1950s and 1960s the supervision and influence that Ottawa exercised through its annual audit of each school's accounts gave at least the appearance of increasing government control.

      Indian Affairs' movement towards integrated schooling provoked another round in the Baptist-Anglican confrontation in the latter part of the 1950s. These sectarian battles in the North focused on which denomination would oversee the new hostel or hostels that were to be built to house children who would attend local day schools.

      The Baptists' brief success in Yukon proved to be the last such incident in the residential school story, for the decade of the 1960s would bring the end of a system of residential schooling for Native children. During an era that also saw enormous upheaval in Canadian political life, disillusionment with the residential schools became very powerful. Aboriginal criticism and missionary disenchantment combined to undermine whatever credibility and legitimacy the schools still possessed. Ottawa tried bravely to carry on with its integration policy in the face of continuing Catholic criticism and opposition. Its efforts to find solutions through yet another joint parliamentary committee and investigation of the schools only served to bring to the surface more voluble Native complaints and more evidence that the schools were not serving their intended clients satisfactorily. Finally, beset by these problems, Indian Affairs found itself facing loud demands for control of some schools by Indian groups. The combination of Native criticism, public revelations of inadequacies in the schools, and Aboriginal demands for greater control of Native schooling led, by the end of the 1960s, to a decision to close the residential schools entirely.