A Victorian Ombudsman's report found their trauma was exacerbated by the way the department mishandled the case and did not check if there were any other victims.
The allegations surfaced when another staff member said they saw the teacher inappropriately touch a student in the playground, but the school and department found there was no substance to the accusation.
"'Get (the teacher) away from children, I know what I saw,' the witness said at the time.
The teacher stayed employed at the school for two more years before shifting to another government school.
After the teacher moved on, that student and a second student came forward about alleged abuse.
The report found the first child was interviewed without their parents or appropriate expertise, while the department did not provide the school with accurate advice or support.
It contrasts with the teacher, who was interviewed twice because the first time they did not have a support person.
The first child's parents did not find out about the playground incident until court hearings years later and both families were left to deal with the abuse on their own.
"The department did not follow its own policies and did not meet its legislated responsibilities, meaning it failed to prioritise the safety of children and the welfare of their families," the report stated.
The teacher was convicted of child sexual offences against both children.
The Ombudsman's investigation was triggered in 2023, sparked by complaints.
"When allegations and disclosures of abuse are mishandled, the trauma experienced by the child victim-survivors, their families and the broader school community can be exacerbated," the report stated.
The location and dates of the abuse are not public, however laws relevant to the case came into force in 2005.
An apology was issued to the first student five years after they came forward once civil legal action against the department ended, with an apology to the second given before their court case.
The first child said it was harder than expected to move on from the abuse.
"I feel broken and used. I feel like I don't deserve happiness or love," they said in the report.
One of their parents said it didn't make sense they weren't told of the playground incident, as the school kept them up to date with their child's scratches and need for band-aids.
"This whole incident and investigation has left so many ripple effect scars on so many people, that all of us are still clearly being affected by," they said.
The Department of Education is deeply sorry and committed to learning from what happened, secretary Jenny Atta said in the report.
"It is wholly unacceptable that a young person should suffer while they are under the care and supervision of a Victorian Government school," she said.
Victorian Premier Jacinta Allan said the state failed these children and more must be done to improve supports.
Sexual Assault Services Victoria chief executive Kathleen Maltzahn said teachers abusing students is frequent and her organisation wants funding to create an emergency response package for schools.
Some 1.5 million Australians aged 18 or over report being sexually abused by an adult before turning 15.
A 2023 inquiry into child sexual abuse at 24 institutions including Beaumaris Primary School from the 1960s to the 1990s found the department failed to act on allegations and prioritised reputation over safety.
Victims of abuse prior to 2000 have been asked to take part in a truth-telling process, before a statewide apology in 2026.
