I'd be wondering if maybe there's a teacher fit problem. He might be retained because he's at level but not "confident" yet?? That's not a reason to retain a kid. If he needs to be more confident, or if he's not quite at level, he should be getting extra help from reading specialists, aides, or special ed teacher. Retention shouldn't even be part of the discussion until the school has provided extra help in this scenario.
I have to agree. I am so surprised by what you describe. I guess it could be regional differences. I have my DS's K report card here because he received it last week and it talks about learning some high-frequency words by year's end, IDing all letters, and, well, it does say read beginner books. For writing, print "many" letters. "Write letters for sounds." For math, add and subtract to 5, understand 11-19, understand and name shapes, count to 100 by ones and 10s, write numbers to 20.