That is asking a lot from you! A gift exchange is not appropriate for school, imo. We have celebrations that the parents volunteer to provide a special snack and drink for so $5 per kid for pizza would annoy me too. And $20 per kid for the teacher's gift is asking a lot.

I actually usually opt out of the "classroom" gift. I feel like the meaning of gift giving is lost (for the child) when it is done as a mass gift. I prefer my children to personally hand the teacher a card/gift, no matter how small, to show their appreciation for what they do. This year we are giving gift cards to a bookstore...I cashed in some points on my credit card to get them so I didn't have to shell out extra money out of pocket.

Don't feel rotten. They are asking too much and you can only do what you can afford to do. Anyone would understand that in this tough economy.