We have heard that phrase, and tons of similar ones since DD started school. In one class that meant that she was allowed to pick her own books from the library! In another it meant that rather than letting her go up in social studies (for fears that discussing the civil war would be too distressing to her) they would broaden her knowledge of the Greeks and Romans by teaching her Latin.

Last year it meant that since she "wasn't showing initiative" and going above and beyond what the teacher said was expected, she needed to start going above and beyond. (For a kid with signs of perfectionism, the vagueness of "going above and beyond" was terrifying.)
I know that the various schools we've dealt with (we're onto #4 now) are not in favor of acceleration, whether in class or through pull out classes, because they have been convinced that either the material above the child is too mature for them, or that if the kid is learning at a different grade level and then goes and takes the state test in the grade level they are registered in they will not do well. And, since funding for the schools depends on good state test scores, most schools are not willing to take the risk of having one of their high scorers not do well.
I know it is mixed up, but that has been the bottom line everywhere we've been.