I've seen it happen. And been told there wasn't any money to give me a payrise or pay me for my contracted and payable overtime by the same people that signed off on it.
When we had mass redundancies (getting rid of the older staff), because big flashy shows were something the head liked, they spent £1500 on a starcloth for the stage when there were already perfectly serviceable blacks and flats. And then £1800 on renting a backdrop for the show. Plus the professional lighting crew (£7000). And the professional musicians (very much against the terms of the show licence, by the way). and the £2 grand license plus 10% of the takings. And the staging rental. And costume hire.
Couldn't afford new textbooks or to repair the roof, toilets, heating...
I suspect that private schools are the most likely to book big names, however. They do have oodles of cash (my sister worked for one).