First, I would NOT skimp on performance evaluations. As a manager it may be personally hard to tell someone they are a low performer, but especially when there is little/no pay to go around, you need to honestly evaluate your top people, recognize your high performers, and provide a detailed career map for everyone that tells them how to advance. Rather than splitting what little monetary pot may be available among everyone, allocate it to your key players. This is not the time to attempt some schoolyard notion of fairness.
In terms of staff development, let employees explore new technologies, or build small prototypes then present their findings, essentially letting them do “independent research” in an area that interests them, that vaguely ties into the goals of the corporation. It’s free, would likely have been time lost to web browsing anyway, and improves morale, develops staff presentation skills and just might produce useful prototypes that can be leveraged into an enterprise project.
I recently wrote about this on my Tech Republic column which has some additional ideas: http://blogs.techrepublic.com.com/tech-manager/?p=1153