We didn't tell our oldest three children about Santa - we would rather not get to the point where we have to say Santa is just a story but Jesus is real.
Our youngest has picked up on Santa and wants so much to believe in him - and one reason I am refraining from setting her straight is for the sake of the other children at her pre-school. (I tried talking about Saint Nicholas and when I got to the word heaven she just put up a wall, so I let it go...)
Mrs VS
They were given beautifully wrapped boxes containing a Santa hat and a letter explaining that Santa WAS indeed real- he was the spirit of giving and wanting to make someone's Christmas magical and wonderful, and that spirit expressed itself in the form of Mom and Dad and Grandma and Grandpa and many other people. And now they were old enough to BE Santa for others too. There's one rule: they were not to tell any younger child about the Santa Society - it was up to their parents to know when the time was right.
As to the school system not having a "Santa policy", the policy of common sense should cover the subject. That is a policy, however, that is sorely missing in public schools across the nation.