T.,
First, I would praise your daughter's behavior for coming out and telling you! That is something that you need to acknowledge more than once, so she realizes that it is important to tell you and your husband things that happen to her no matter how ugly they may be.
Second, I would go to the school and first speak with the teacher. Depending on the teacher's reaction and action I would go to the principal.
When one of my kids were in kinder, I think it was the middle one (all three of them were with the same teacher, so I can't quite remember which class it was) there were kids talking about their private parts like they were talking about cartoons!!! One of the kids, explained to some friends how his mommy and boyfriend did the 'nasty' in the kitchen table!!!! And told a little girl that he wanted to touch her private's with his!!! THIS WAS IN KINDER!!!! Now remind you, 98% of the class didn't really know what he was talking about, because they had never been exposed to anything like that! The moment the teacher found out, of course by the little girl who came to her telling her what happened, the child's mother was called in to the school and the little kid was almost taken out of the class.
They worked with him and told him how unappropriated that behavior was. It never happened again. The mother was beyond embarrassment and denial!!!
So having said all that, please remember to praise your daughter for not keeping that to herself, and let her know that she is responsible for what she does, not for what others do. Talk to the teacher right away!!!
I would also take my husband with me if I was you.
Blessings