Might I suggest building a launcher for 2-liter bottles? You can easily build a launcher for under $20. Empty 2-liter bottles are practically free. After that, some of that thicker posterboard stuff, or whatever the kids want to use - along with their imagination. Launch = pumping it up with a bike pump. Fuel = air & water (fill the bottle about half way with water.)
http://www.youtube.com/watch?v=DusmrzYQiy4
Something like this - note, there's only a 2 liter bottle. Leave it to the kids to figure out how to add fins & a nose cone. I little weight toward the top helps a lot too. Do *not* put your hand on top of the bottle while it's pressurized - that's the equivalent of leaning over a regular rocket while a fuse is lit.
The expense of such rocketry is very small and allows a ton of creativity. Mechanically inclined kids can easily move up to parachutes, 2 (or more) stage rockets, cameras, altimeters, etc. - and never spend a cent on rocket engines.
http://www.youtube.com/watch?v=0qzOzjRJpaU
A very simple launcher, and kids can do dozens upon dozens of launches in an afternoon.
And, if you and the kids are especially adventurous & mechanically inclined, you can start making your own carbon fiber wrapped 2-liter bottles capable of a lot more pressure and MUCH higher altitudes. Of course, with the higher pressure, comes increased risk; always have a rough idea what the bursting pressure is & stay way away from it.