We've looked at this subject before, in the context of a presentation by Matthew Yellin, then a NYC public high school social studies teacher (and now Assistant Principal at the same school) on how "separation of church and state" does not require that teachers refrain from teaching students about religion or letting students discuss religion. In fact, Matt noted, "[religion] is an explicit part of my curriculum. Not only is discussing religion in public schools allowed, it is actually mandated by my curriculum."
This topic has also been addressed in a series of resources looking at the legal issues surrounding religious and holiday celebrations in public schools and best practices for teachers that can help them teach about religion as a historical and cultural part of society, while avoiding religious teachings that take a particular position, or are insensitive to the multi-cultural aspects of public schools, their students, and their mission. In fact, the Anti-Defamation League has created a multi-page list of religious and secular observances that teachers can use to infuse their classroom with an understanding of the many ways that a wide range of religions and religious practices impact our culture and our lives.
As you ponder these issues, enjoy your school's holiday concert - religious music and carols are fine, so long as they are part of a larger array of musical offerings. Have a happy and inclusive holiday season!