A landmark state initiative designed to provide universal, free education for every 4-year-old is simultaneously being celebrated as a massive financial relief for families and condemned as an existential threat by the private child care businesses that have long served them. Governor Gavin Newsom’s ambitious expansion of transitional kindergarten (TK) has been championed as a monumental step forward in early childhood education, offering an earlier start in the public school system to all children regardless of their family’s income. Yet, this celebrated public investment is inadvertently triggering a widespread crisis within the private daycare and preschool sector, leading to closures and creating a new scarcity of care for the state’s youngest residents. The program, while solving one problem, appears to be creating another, forcing a difficult conversation about the true cost of progress and the future of child care in California.
A Landmark Initiative With Unforeseen Consequences
Financial Relief for California Families
The statewide rollout of free transitional kindergarten represents a significant financial boon for parents, many of whom have struggled for years with the exorbitant cost of private child care. Since 2020, the Newsom administration has nearly tripled its investment in early childhood programs to over $14 billion, a move that has helped create 130,000 subsidized child care spaces and made TK universally accessible. For a typical family, the savings are transformative. One San Jose family, for instance, reported their monthly child care expenditure of $1,800 was slashed by two-thirds after their son enrolled in the public program. This shift from a private expense to a public good has provided immediate and substantial relief, freeing up household income that can be redirected toward other necessities. The program’s universal nature, available to all families regardless of income, has been lauded as a powerful tool for economic equity, ensuring that a child’s access to early education is no longer dictated by their parents’ ability to pay.
Beyond the significant cost savings, the universal TK initiative is providing California’s children with valuable educational and developmental advantages. By integrating 4-year-olds into the public school system a year earlier, the program offers a structured learning environment that lays a crucial foundation for kindergarten and beyond. This early start provides access to credentialed teachers and a curriculum designed to foster academic and social skills. Furthermore, public school settings often provide access to critical resources that might be unavailable or prohibitively expensive in private centers, such as comprehensive special-education screenings and support services. Proponents argue that this initiative is not merely a child care solution but a fundamental enhancement of the state’s public education system, ensuring that children from all backgrounds have the opportunity to begin their academic journeys on a more even footing.
The Ripple Effect on Private Providers
The success of the public TK program has created a devastating financial disruption for the private child care industry, which has historically relied on a delicate economic balance to remain viable. The business model for most private centers hinges on the tuition from older preschoolers to offset the significantly higher costs associated with infant and toddler care. Caring for younger children requires more intensive resources, including much lower staff-to-child ratios, which drives up operational expenses. The tuition paid for 4-year-olds, who require less direct supervision, has traditionally subsidized the care for these younger age groups, allowing centers to offer a full range of services. With the mass migration of 4-year-olds to the free public system, this crucial revenue stream has evaporated almost overnight, leaving many private providers unable to cover their fundamental costs and facing an uncertain future.
The consequences of this market disruption are becoming starkly clear as private centers across the state are forced to reduce staff, cut programs, or shut their doors permanently. A telling report from UC Berkeley documented the closure of 167 preschools in Los Angeles County alone between 2020 and 2024, a decline that researchers have partially linked to the expansion of public TK. This trend is not an abstract statistic but a reality for countless small business owners. Shilpa Panech, a former preschool owner in San Ramon, had no choice but to close her center after 13 years in operation, a decision that erased 72 licensed child care spots from the community. Even providers who have managed to stay open are struggling. Frisha Moore, who runs a center in Elk Grove, has seen her enrollment plummet from a full capacity with a long waiting list to just 40%, placing her on the brink of closure and threatening the loss of another 91 child care slots.
Navigating a Fractured Child Care Landscape
A Widening Chasm in Child Care Availability
The financial pressure on private daycares is creating a critical and growing shortage of care for the state’s youngest and most vulnerable children: infants and toddlers. As private centers lose the revenue from their 4-year-old classrooms, many find it financially impossible to continue offering the high-cost, low-ratio care required for babies and toddlers. The case of Frisha Moore in Elk Grove powerfully illustrates this cascading crisis. Her center’s potential closure would not only eliminate 91 total child care slots but would specifically remove 20 desperately needed infant spots from the local community. This dynamic is being replicated across California, creating what experts are calling “child care deserts” for children under the age of four. While the state has successfully expanded access for 4-year-olds, it has inadvertently destabilized the very ecosystem that parents of younger children rely on, leaving them with fewer options and higher costs.
The abrupt nature of the TK rollout has left many private providers feeling blindsided and excluded from a major shift in their industry. Many child care professionals, including those now working within the public system, agree that the goal of affordable, high-quality early education is a noble one. Shilpa Panech, the former preschool owner who now works in a public school, describes the public TK programs as “fantastic” for the children they serve. However, she and others lament the lack of a more gradual transition or a collaborative approach that could have integrated private providers into the new system. The rapid implementation failed to account for the intricate financial models of private centers, offering little time or support for them to adapt. This has fostered a sense of resentment among providers who feel they were an essential part of the community’s child care infrastructure one day and treated as an obstacle to be overcome the next.
Charting a Course for a Sustainable Future
In response to the growing crisis, child care advocates and affected providers are actively proposing solutions aimed at creating a more integrated and sustainable early education ecosystem. A primary focus of these proposals is the establishment of formal partnerships between public school districts and private child care centers. Such collaborations could allow private facilities to offer wraparound services, such as before- and after-school care for TK students, providing a new revenue stream to help them stay afloat. Another key recommendation is a significant increase in state funding for child care vouchers. By expanding voucher programs and raising reimbursement rates, the state could empower families to use public funds at private facilities, giving parents more choice while providing a critical financial lifeline to struggling centers. These solutions seek to leverage the existing infrastructure of private care rather than rendering it obsolete.
The goal is to build a system that supports families with children of all ages, not just one specific group at the expense of others. This involves recognizing the unique roles that both public and private sectors can play in a comprehensive child care network. Public TK can provide a standardized, academic foundation for 4-year-olds, while a healthy private sector can offer the flexible, specialized care that is essential for infants, toddlers, and families with non-traditional work schedules. The current challenges have highlighted the interconnectedness of the child care market, demonstrating that policy decisions in one area can have profound and often unintended impacts on another. Moving forward, a more holistic approach that values collaboration and supports the entire spectrum of early childhood care will be necessary to ensure that California can meet the diverse needs of all its families.
An Unintended Legacy
The rollout of universal transitional kindergarten in California was a well-intentioned policy that succeeded in delivering significant financial relief and educational opportunities to families with 4-year-olds. However, its implementation without adequate consideration for the existing private child care market created an economic shockwave that led to the closure of numerous facilities and a sharp reduction in available care for infants and toddlers. The experience underscored the complex interdependencies within the child care ecosystem and revealed how a top-down public initiative could inadvertently destabilize the very sector it was meant to augment. The ensuing crisis prompted a necessary re-evaluation of state policy, sparking calls for greater collaboration between public and private providers and for a more integrated approach to early childhood education funding.
