It is normal for children to learn how to read in 1st grade, and a school which thinks incoming 1st graders should already know how to read is trying to push its job onto parents.
Googling "what grade children learn read", the first link
http://www.pbs.org/parents/goingtoschool/what_1.html says
"First grade is traditionally thought of as the level where children learn to read. Not all children become fluent readers by the end of the first grade, but most take their first solid steps toward fluid reading. Their reading material varies from simple rhymes, to classroom news, to patterned stories and beginner non-fiction books. By the end of the year, most are reading grade-level chapter books and some are reading at even more advanced levels. First graders love true stories of long ago, even though their sense of time isn�t well developed. Some good historical books include The Man Who Walked Between Two Towers by Mordicai Gerstein, My Brother Martin by Christine King, and The Story of Ruby Bridges by Robert Coles.
First-grade teachers help children listen for sounds in words, write the sounds they hear, and discover parts of written language, like the �at in cat that they can then use to figure out the words hat, mat, and sat.
Writing, like reading, takes a variety of forms in the first-grade classroom. Children "invent" their spellings as they work out their understandings of written language. Writing activities include journal writing, writing creative stories, or documenting their work in other subject areas. Teachers frequently ask children to sound out the words they write to introduce the sounds that letters make."
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Our eldest son, who is gifted, was reading fluently before age 4, our 2nd son, who will enter 1st grade this fall, has learned how to read over the last year, and our daughter will likely be reading before entering 1st grade. Her mother will see to that. But I think a normal kid who knows the alphabet but cannot read should not be discouraged from entering 1st grade at age 6. Schools may be more interested in pumping up standardized test scores by enrolling older students than it doing what is best for the children.