It is a red flag because that does sound substantiallly below 2nd grade level. However, keep in mind that it is common for homework to be below the level of the classwork so it would be helpful to actually look at the class assignments instead. It is also possible that both the teachers you spoke to were consistent. End of year tests are necessarily limited and will not cover everything in the curriculum for one school year. However, there will be testing (likely more than one) to determine acceleration. For example, DS actually took several end-of-year tests as well as a specially designed math ability test to accelerate when he was in 2nd grade.
