I ran across a blog the other day insisting that religious freedom was under attack and that prayer in school had been outlawed. So I did a search for the guidelines I had run across once before on the internet.
The guidelines are in the document, Guidance on Constitutionally Protected Prayer in Public Elementary and Secondary Schools. These are published by the Department of Education and are located at:
http://www2.ed.gov/policy/gen/guid/religionandschools/prayer_guidance.html
The general principle is that a public school must respect religion as a private matter. A student is free to pray, read a Bible, or meet with other students to pray during free time at lunch or recess. A teacher is free to do the same when acting as a private person, before or after classes. But no representative of the school, when acting as such, may lead students in prayer.
Religious clubs must be accommodated to the same degree as non-religious clubs.
If writing assignments allow the student to choose the topic, then a student may write on religious topics and be graded fairly by the same curriculum criteria used to grade other papers.
When students are chosen to speak at assemblies, their religion must not be used to include or exclude them. As long as the student is free to choose their own content, they must be allowed to include religious ideas if they wish.
It is only the school itself that must remain neutral. The school cannot circumvent this by choosing only students who will include religious speech.
The Guidance on Constitutionally Protected Prayer in Public Elementary and Secondary Schools in the link above provides further details on the background, the rules, and the court rulings involved.