The school can ignore it smile DD was on level 30 (lexile 1000) as a 6yo last year, but was held on level 22 for silly reasons I won't go into.
Anyway this year her teacher says they're not allowed to give novels, as they're for the older kids, so he's keeping her with the top reading group working on levels 25-30 BUT as her homework reading she can read whatever novels she's got - A Series of Unfortunate Events at the moment. So that at least gets rid of the tedium of reading the easy book twice!
Maybe that's a workaround for an inflexible school, finding a flexible teacher and nutting out a similar solution?