I found that when my DS was in first grade, he tested at 4th grade level reading at the beginning of the year. And he still tested at that level at the end of the year according to his first grade teacher. He could read at a higher level, but according to her had comprehension issues. Much like someone earlier, he just didn't want to write book reports in 1st grade when no one else was doing it. He would not read a long book unless he "got" it and enjoyed it. He is not known for his amazing work ethic or sticktoitiveness
Meanwhile at home, he read 4th grade books in an hour as brain candy and read many higher level books with increasing difficulty throughout the year. We never had any formal vocab or curriculum. I just really watched the lexile levels of books and shopped around for things he would be interested in.
I wouldn't necessarily believe the reading level the teacher is getting. Some teachers (like our 1st grade teacher) figured that once you were above grade level, it wasn't worth investing a lot of time to figure out what they should be reading.
Anyway - good luck! Hope you get a better teacher next year! We actually are homeschooling at this point.