OP, did you come back and tell us if this was on two different buses -- school bus and daycare bus? Not that it matters in one sense: It has to stop. But it does matter whether you as the parent have only one, or two, administrations to deal with here.
I write this as a mom whose DD had a similar but not nearly as severe situation in first grade. More on that later.
OP, your DD's bully is far worse than the kid who touched my DD's backside was. Your daughter's bully is touching her REPEATEDLY. He's getting away with it. And yes, it's sexual harassment--in fact, I'd call it assault despite his age. I was appalled that an earlier poster said it wasn't sexual harassment because kids this age don't know about sex. But they don't have to! This boy who is frankly spanking your DD's backside is doing it because he's perfectly aware it makes her uncomfortable in a way that is not just about the discomfort of the actual hit; he knows that SHE knows there are places that people are not supposed to be touching her and he is violating that private space. He may not be capable yet of thinking about sex when he does this, but it's still being done because he's somehow aware it's causing her a kind of unnamed but deeper upset than she would feel if the hit were, for instance, to her shoulder. It's "sexualized," even if neither he nor she knows enough to realize it's "sexual." That's another reason it has to stop--not just for your poor DD's sake but for the sake of this boy who is learning that he can invade girls' bodies, and make comments about their taking off or pulling up their clothes, and get away with it. He'll do it again to some other girl.
Please e-mail the principal tonight. Copy DD's classroom teacher. Say that you are coming in, in person, tomorrow at (whatever time, early) to fill in the official bullying report form and you expect to put it into the principal's hands. Write that you expect this boy, NOT your child, to be moved to the front of the bus as policy, not for just a few times after which he returns to any seat he wants.
Then go in the next day, and fill in the bullying report form while you stand there in the school office; don't take it and leave. When you hand it in, tell the principal that you expect that if your DD is touched by this child again on the bus the next day, you will call and e-mail the school board that same day. "I would regret having to go over the local school's head about this, but this is not something that as a parent I can let continue even another day; my child is extremely distressed and does not feel safe on the bus at all. She has a right to feel safe in the school environment and that includes on board the bus the school provides."
Stay calm, stay cool, do not get emotional or upset in front of anyone in the office. Stick to facts. Do not ever badmouth the boy or say he's bad. I hope you can name some specific dates or the number of times total he has done this. Be clear that you believe your child -- they might try to say it's being blown out of proportion, but don't take that bait!
Then DO what you threaten, if nothing changes.
With the daycare, go nuts if you have to and tell them that if their driver can't handle this kid, you will vote with your feet and find another daycare and expect them not to ask you for one penny in any fees for a broken contract with them. Toss around terms like "You do realize that this could be considered bullying at BEST and sexual harassment at worst, since he clearly focuses on wanting her to bare parts of her body and he touches her just on her butt? If you can't control it I will have to involve someone from outside like an attorney." The words "attorney" and "harassment" and "involve outsiders" should get any business scared.
This whole thing makes me furious on your behalf.
Here's what happened when my DD was in first grade a few years back. A boy in her class touched her butt once -- once -- while they were in a line at school. But (we later found out) he also was known to be very handsy and rough and got into fights with boys regularly. It wasn't shocking that he would touch a girl while in line, really.
DD was confused and upset (not teary, but she just knew that someone else was not supposed to touch her bottom). She told me. I told the principal, directly and in person, within a day. I asked to meet with the principal, was seen and the principal said she would take it up that same day with the classroom teacher. BTW, I asked for nothing, I just said I wanted to let the school know this boy was being inappropriate and that it was up to the school to handle it. Well, the teacher and principal worked together with lightning speed, and factored in his overall issue with keeping his hands to himself. The next day the teacher moved his desk so it was against hers --when he sat at the desk, he was eye to eye with her. At circle times, he had to sit next to her. If he was acting up, he was instantly sent every single time to the principal, who would sit him at a table in her personal office while he did his schoolwork right there. Yes, this was at a local public elementary! The key factors? A classroom teacher with decades of experience, meaning she had no fear of parents complaining to her that she was "being mean," and a principal who was willing to get personally involved by being THE person to whom this boy was sent very consistently. He wasn't suspended or worse, I think, because he wasn't repeatedly touching any one person, plus, it was known that he had older brothers who were modeling some poor behavior.
This was the policy the whole year long but he gradually behaved better when he realized that this wasn't teacher being "mad" at him temporarily, and it also wasn't a game -- it was how his life at school would be, every day, and these adults were not going to change it or stop it. They were very consistent and calm about it. He figured out that he'd rather be in the classroom that sitting alone working at a table in the principal's office. And believe me , the principal and teacher also praised him a ton when he behaved well and did his work. I am NOT saying your school needs to do anything this draconian-- you need to focus just on your own DD and on stopping this kid who is bullying her; frankly, considering what you describe about his comments and touching, he doesn't even deserve the treatment that the kid I'm describing here got.