We didn't do much (not a lot of money available). We got a couple of couches off of freecycle, tables donated from teachers, some plants (fake, because really, who would take care of them), new curtains and fabric for the bulletin board, and paint. Our principal found money for the paint, fabric, and some plants. It's not a luxury lounge by any means, but it is an improvement.
We also painted the two bathrooms attached to our lounge. We had chosen three possible colors for the lounge and painted quick swatches on the walls so that teachers could vote on their choice. We used the rest of the two losing paints for the bathrooms so that we did not waste any paint. (The colors look shockingly similar in these pictures, but there is a wide range of greens here.)