Should my daughter tell teacher so they can be separated or not send him back? But still call teacher and tell her so he can't do it to anyone else?it's 10 days of safety town and he has went 4. Safety town. Right.

How did he touch him improperly? They are 4 and 5 years old, correct? Could you be overreacting?

Wow. Agree with the overreacting. This is a teaching/learning opportunity for all involved, present company included. If you react like this for each teaching opportunity, then it's going to be a stressful childhood and grandparenthood. And I know it's hard to believe this in a world of Kardashian's, but kids do experiment. That's not what happened here - just preparing you for the teen years.

Instruction should start with your own 5 year old from the parent, grandma. I strongly advise the parent have some instruction as to the best ways to age appropriately instruct a 5 year old on touching others, and what's appropriate, and not appropriate, both by him and by others. This is best handled by adults and professionals in very discreet ways.

It's not a matter of separating them or not sending him back, but teaching him what he should and should not do, and what he should do when it happens. If he told your daughter about it I am sure she will get with the teacher and have a strategy for the right kind of age appropriate ways to handle this situation.

I would be very interested to know how your daughter handles this if at all possible. How did YOU find out about this situation?

I’m not sure what safety town is, but as a teacher, I need more details. First, the teacher should be notified immediately. She needs to know what your grandson said. Then, she can speak to the other child. This may be something that needs to be looked into, or it can be resolved with a conversation.
As a veteran teacher, this must be looked into. If not, in today’s world, it can become a major issue. Start with the teacher, and let her handle it. From my experience, children often are told that no one is allowed to touch them in a private area. So, in a school or play setting, a child may bump into or accidentally touch them, and they report it to me.
Many times, it’s nothing, but I can name many instances where the touching was inappropriate and it had to be investigated and dealt with.