I agree with ColinsMum-- sounds like this school is not a good fit for your child. If there are other gifted children there, why isn't she grouped with them? Have you considered a grade skip? Has she had a thorough achievement test done so everyone knows her levels?
Last year in K, my dd was embarrassed that they were having her read "baby books," as she called them. She claimed 2yo's could read the books she was being asked to read and she hid them in her backpack. I talked to the teacher and got some relief, but basically I just let it go, knowing my dd had tested into the HGT program and would be challenged starting in 1st grade. Last year, we focused on writing and spelling, which are important components of literacy.
I made sure to afterschool her, and provide her with enrichment away from school. We also talked about K as another play year and a year for art (which she loves.) Yes, it's a wasted academic year, but again, I knew her 1st grade situation would be wonderful (Her brother had the same fantastic teacher) so I could afford to let it ride. Our school was open to a skip, but we weren't interested in that for her at that time. But maybe it's something you should be investigating?
In your shoes, I would find out if they're going to figure out how to allow your dd to learn something in class. And ask for the plan. If they can't do it-- now-- I think you should be looking somewhere else.
