I hear that it happens in many places, but it is not our own experience. I don't believe my kids in the early grades were tested as far as possible, considering DD was given a Guided Reading (F&P) level of P spring of 1st grade and the same P in fall of 2nd, but then was S by winter of 2nd (a chart I am looking at says that P correlates with a 38 in DRA, end of 3rd grade level, 28 being comparable to M, end of 2nd grade level, S as end of 4th). They were at least consistently rated above-grade level by two years (DS was a Z+ by 4th grade), and marked accordingly on their report cards as 'exceeding standards' for reading level.
I still had to advocate for showing demonstrable growth (same level for 7 months, when she really grew a lot over summer?). Perhaps the approach you can take with advocacy is that you would like a full assessment of reading due to insufficient demonstration of growth, under the guise of there could be a problem if there has been no growth, and then you can establish a more appropriate instruction level? In our schools, reading 2+ grades above elicits some differentiation, top cluster reads higher level books and a little more depth. They don't send kids to into above-level classrooms for SSA or anything.
