Our 5th grade parent group had Survivor - West Freehold Island last year. Parents went all out and built their own palm trees since the ones in the party stores are short and too fake.
Start with tomato cages turned upside down. Use wrapping paper rolls taped together & attached to the narrow end of cage. You can also ask your local fabric store for empty rolls or PVC pipe. Wrap the entire "tree trunk" in brown paper. they used paper bags and brown shipping paper for the lower, wide end and brown paper lunch bags with the bottoms popped out to slip down the trunk. It looked great once the paper was crinkled to appear like a real palm tree. Green paper palms were attached and brown balloons were coconuts.
Large tikis were created from popcorn tins stacked & taped together, wrapped in brown paper and then faces drawn on it.
Grass skirts can be used to create a tiki bar with fun island drinks & snow cones represent the island version.
Boogie boards or surf boards borrowed from a local shop (or drawn on paper) add to the look of the event area.
A giant word search was created on the wall for kids to play and games and relay races were conducted to keep everyone active. For a school-wide event, create games with the island theme. Also, have kids come dressed up to add to the festive scene. Hand out leis as prizes or at the door if dressed for the occasion.
Goodtimesattractions.com also has some inexpensive things in bulk.
We did a Luau for back to school and it was a huge hit. We had limbo, and made paper tissue flowers for the girls to wear in their hair and sold them for 25 cent. We sold lei's. We bought a grass shirt and a pair of oversized sunglasses for the janitor (who is short and round) and made him a sign that said "CHIEF KOOKAMONGA" and he actually wore it all night! The kids LOVED it. He was actually a big hit walking around like that, and when he would shake his skirt, the kids and parents would laugh!
We used this theme a couple of years ago and I got a great decorating idea from Family Fun Magazine. It was vines made of paper bags. They were very cute.