My DD6 is at a similar reading level, and these are a few things her teacher will be doing this year for her language arts (we are at a school that loops, so she has the same teacher for K and 1st....a wonderful thing for us!):

- inferencing work
- story cubes, you can find them at education stores. The teacher bought a set just for her that is around a 3rd grade level, to encourage her to write about what she is reading (precursor to a book report type project, more in depth than basic comprehension).
- including many grammatical concepts into her reading time (adjectives, adverbs, etc).
- they started a spelling program with her last year in K, and will just continue at the level she is at. Spelling at DD's school is differentiated for all kids.
- building vocabulary, particularly non-fiction, topics picked by DD
- an introduction to shakespeare (initiated by DD, using the Usborne Illustrated Shakespeare book).