Competing at FS5 for a year+ is not sandbagging. It means she has not tested out of that level yet. When my daughter started out in basic skills, you could compete up one level at some competitions, so that skater might have been FS4 competing at FS5, and is staying there because she still hasn't mastered the FS5 elements, so isn't quite confident enough to compete up at FS6.
What is on the FS5 level anyways? My daughter tested through a few levels at once, and I can't remember what was on each one - I got stuck at FS2 (or 3?), so I never got passed salchow...
Off to hunt through the old skating stuff, now I'm curious!