I am a second grade teacher.  Every year I teach students language
arts through music.  What does the law say about making cds for my
students that include songs from various artists?  I have purchased
all of the music myself and would like to give them a cd of the songs
they have learned as an end of the year gift.  Is this legal?  If so,
could you provide proof?  I am looking for an unbiased response.  Upon
looking up information myself, it seems that the law is unclear and I
find more opinions than anything.

this link may help you a little bit
http://www.menc.org/information/copyright/copyr.html

I don't see how the law is unclear.  I suggest you don't do what you
propose, as it is stealing.  You paid for one copy of the song.  In
order to distribute it legally, you would have to pay for each copy
(or get permission for the copyright holder).

Read what is printed by the copyright symbol on the recordings that
you have purchased. It probably says something like "All rights
reserved" and "Unauthorised duplication, copying, hiring, lending,
public performance and broadcasting prohibited."  Yes, you might have
purchased these recordings for yourself but that is all you have
purchased them for - your own private use. If you want to use them in
an education programme you, or your school, should ask the copyright
holder for permission. You will probably need to pay additional
royalties for each recording you make, though fees could be waived or
reduced because it is done for educational purposes. If you do not ask
you, your school and, possibly, your students risk being sued for
breach of copyright.

A couple of months ago, an educational institute in New Zealand
(Waiariki Institute of Technology) was taken to court of breach of
copyright because they copied large amounts of texts (whole chapters
of published works) out of textbooks and gave the copies to students.
This activity was considered to be far beyond "Fair Use" limits. Just
because they gave the copies away and were an educational institution
did not make them immune from prosecution. They had to pay the
royalties for all the copies they had made and given away.

See : http://www.scoop.co.nz/stories/BU0505/S00256.htm

The Courts of many countries will probably treat your case in a
similar way. They might even refer to this particular case because it
set a legal precedent. Remember, Copyright Law is controlled by an
international convention that is supported by local copyright laws.
The legal principles in the New Zealand case are probably applicable
internationally.

Put simply, UNAUTHORISED copying is theft. Ask your local copyright
representative for permission before you copy any copyrighted work.

While the law usually allows some leeway to allow limited copying for
educational purposes, I cannot see how giving aways copies as a gift
could possibly be legal.