"Why are they expanding the school?"
Translation:Warum erweitern sie die Schule?
Hm... not sure. I think the main meaning of ausbauen here would be something like "complete", as in to make portions which were previously not usable (perhaps because the budget had not been enough to complete that wing and so it was just a concrete shell), usable (perhaps by putting in internal walls, wallpapering, etc.).
Rather than adding a new wing.
Capitalized "Sie" is formal "you". Lower case "sie" is either "she" or "them"; you can tell which one by the verb.
Warum erweitern Sie die Schule - formal "you"
Warum erweitern sie die Schule - verb is 3rd person plural, sie = they
Warum erweitert sie die Schule - verb is 3rd person singular, sie = she