How to deal with a jealous bully.

Today my daughter (in picture) received a threat (in writing - not very smart) from a jealous bully. She told my daughter that she is going to "curbstomp" her. Now, my daughter isn't a wimp by any means but she is not one who has any interest in fighting... She is a good student and a nice girl. She is not perfect by any means but was not looking for trouble. She has been trying to ignore the silly comments and childish taunts from this girl and I give her a lot of credit for it. It is very apparent from the incidents that have occurred that the girl is extremely jealous and comes from an extremely dysfunctional family and does not know how to deal with her emotions properly. She used to be a friend of my daughter and became jealous because of the normal teenage thing....a boy. Now for someone to be upset is one thing but to threaten her is another thing. At first we felt that we didn't want to get the girl in trouble but enough is enough.
How would you deal with this situation? Going to the school is the first thing that I am going to do because I don't want this to affect my daughter's good grades. Should we go to the police? Any advice??