Oh my goodness. Preschool is not about whether a child can count or identify a circle vs. a rectangle! It's not about academics and facts! Stop teaching all of that and worrying about a "report card."
For 2-4 year olds, learning is and should be play-based. The purpose of preschool isn't the "school" part, it's the "pre" part - "preparing" for life later on. She should be learning to separate from Mom/Dad/caregiver, learning to sit in a circle and do what the group is doing (rather than, say, jumping up to go play elsewhere), and learning to negotiate her own space without elbowing the next kid. That's it!
If a school brings in some early intervention experts (done frequently in programs run by the school system), that's a GOOD thing. Let them evaluate, and stop taking it personally. Stop talking about "advancing" next year - wrong term. I do think it's early for them to use that term anyway - a lot can happen between October and June, you know? So her "report card" says she doesn't know certain facts - but that's probably because she's not speaking up or participating, so how would they know?
What should concern you is not whether she knows red from green or squares from triangles, but that she's not happy - she's not joining the group or listening to this teacher. You know what that means? It means she 3! It means she's doing certain things and not others - like she's learning colors at home with you but she isn't yet socially ready to be in this sort of program. That's all. Now, before you get all fired up about this, go back to her first year. When did she walk? Talk? Get teeth? Did every kid you know walk at the same point? Get teeth? No, of course now. My kid was a super early walker and a super late talker. (The doctor checked his hearing and made sure there was no reason for not talking other than developmental. That's called evaluation - if everything is fine, you just wait it out.) My neighbor's kid was the opposite - early talker, late walker. Mine got 1 tooth at 4 months, then nothing for ages. Other kids didn't get a tooth until 7 months but got a whole bunch together. Guess what? They're all caught up. The point is, it doesn't matter!
Perhaps if you stop worrying about facts & figures, and concentrate on letting her play but start to follow directions, she'll come along. Maybe this school can help her and she just needs time. Maybe this is the wrong program for her, or the wrong time for her. Have a calm sit-down with the staff and talk about their goals and school philosophy. Talk about readiness - not about intelligence. Learn the difference between playing in the park and being ready to follow directions in a large group from a new teacher. But do stop panicking. Take some time to talk - without being defensive of your child - and figure out whether she needs another year, another program, or just some time, and what sort of supports are available.
Reminder - she's 3.