Two Questions

I just watched this for the first time last night on TCM. Can someone help me with two questions? Near the beginning the boy walks into what I thought was a school. A minute later a man walks into the school, grabs the boy, takes him outside, and locks him in another part of the building. I didn't understand this at all. Near the end of the movie, after the balloon has started to deflate and is on the ground, someone stomps on the balloon and breaks it. Was that someone from the gang or was it the boy "putting the balloon out of its misery"? Thanks.