Dubbed the "Merry Christmas" bill, the bipartisan measure sailed through the state House and Senate to reach Perry's desk.
It removes legal risks of saying "Merry Christmas" in schools while also protecting traditional holiday symbols, such as a menorah or nativity scene, so long as more than one religion and a secular symbol are also reflected.
"I realize it's only June. But it's a good June and the holidays are coming early this year," Perry said. " It's a shame that a bill like this one I'm signing today is even required, but I'm glad that we're standing up for religious freedom in this state. Religious freedom does not mean freedom from religion."
Schools across the country cannot impose religion on their students, forcing them to celebrate any type of religious activity, but students do have the constitutional right, freedom of religion, to say prayers or otherwise acknowledge or celebrate their own religious holidays.
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The bill's sponsor, Republican Rep. Dwayne Bohac of Houston, said he drafted it after discovering that his son's school erected a "holiday tree" in December because any mention of Christmas could spark litigation.
"We hope that this is a fire that will take off and become laws in the other 49 states," said Bohac, who said his bill has attracted national attention.
He added of Perry: "This is not a governor that shirks away from the tough issues. And this should not be a tough issue, which is what's even amazing about all this. But this is just political correctness that's run a-muck and our brains have been completely fallen out as a result."
As Perry signed the bill, 10 members of a group called the Lone Star Santas - with long white beards but wearing colorful summer garb rather than their traditional red suits - cheered and rang bells. Standing behind Perry's desk was Glenn Westberry, or "Santa G" from Houston, and Rabbi Zev Johnson of the Rohr Chabad Jewish Center at the University of Texas.
Both cheered the bill, with Westberry saying he has been "persona non grata in Texas schools for too long." Johnson joked, "I thought this was the 'Happy Hanukkah' law."
Kudos to Perry and the bipartisan members of the Texas House and Senate, for acknowledging the the students' right to celebrate their holidays and the difference between religious freedom and freedom from religion.