Extending areas horizontally is not the only thing you can do, you can also extend multi-story buildings vertically to meet the needs of more "original" developments and even build some "bizarre" buildings.
Teacher's and student's fates depend on the headmaster ---- recruit whomever you want, cramming or being more flexible is all your choice. they could have much low engagement if they start feeling depressed.
Extending areas horizontally is not the only thing you can do, you can also extend multi-story buildings vertically to meet the needs of more "original" developments and even build some "bizarre" buildings. From outside of school society, the headmaster has to also take care of threats coming from mysterious evil forces and all sorts of potential threats that might cause you go bananas. Developing your teachers will unlock their skills to fit in different positions.