Why did the principal kill the Hadlers? He mentions he was threatened by someone and had no choice. I reckon those would be the creditors, but what would they want him to kill the family?
He was falsifying grant requests to pay off his debts. The woman who worked there got wise to it so he killed her. To cover his tracks he made it look like a murder suicide by killing her husband as well. He only killed the boy because he was a witness.
My point is that he says he killed them because he was threatened. He says that his girl was about to die and he had to commit the murder. I understand he would do it for covering up the scam, but being threatened to kill doesn't make sense. Check the dialogue just before he sets himself on fire.
Principal: This whole thing was for my family. I brought them up here to protect them. They found me anyway, came for the money I owed. They made me hold the nail gun they were gonna pin my daughter to the wall with. The carving knife, they were gonna slit her throat with. I had no choice!
Falk: You needed the money, huh? For your family. Everyone will understand.
The people he owed money to threatened his family. To pay them off he committed grant fraud. Karen Hadler discovered this and was going to alert Falk and the authorities. To prevent that he killed her, ensuring he'd receive the money he needed to pay off his debts and protect his family.
Nah!! got the plot. I am clear. The question Falk asked if I remember correctly, was why he Killed the Hadlers. The explanation was a bit ambiguous I felt. If you see he speaks only about the creditors and never about the scam.
BTW, if you ever want to review dialogue an easy and efficient way is subtitles which you can download from several sites, subscene being a very good one. (They can be opened with Notepad.) The dialogue I cited I copied and pasted from a subtitle file.
I am on my office laptop the whole day like right now, apart from the night. Can access any of the content in the morning as a result. Subscene is my go-to site, by not accessible from work laptop.