California's Childcare Conundrum: How Universal Preschool Expansion is Crippling Private Providers

The Promise and Paradox of Transitional Kindergarten

Governor Gavin Newsom’s ambitious expansion of transitional kindergarten (TK) represents one of the most significant educational reforms in recent California history. The program, which provides free public preschool for all 4-year-olds regardless of family income, has been touted as a landmark achievement in early childhood education. Newsom’s administration has nearly tripled funding for childcare and early childhood programs from over $5 billion in 2020 to more than $14 billion this year, creating 130,000 new subsidized childcare slots for low-income families while allowing unionization for home-based childcare providers.

The transitional kindergarten expansion specifically has enrolled approximately 180,000 children statewide, saving families between $9,000 and $24,000 annually in childcare costs while providing educational benefits that prepare children for formal schooling. Parents like Melissa Chen from San Jose report dramatic improvements in their children’s social development and academic readiness. The program has been particularly praised for allowing earlier identification of special needs and creating a more seamless transition into the K-12 system.

The Unintended Consequences

However, this well-intentioned policy has created a devastating ripple effect throughout California’s childcare ecosystem. Private preschool providers like Frisha Moore in Elk Grove are facing existential threats as families increasingly opt for the free public option. Moore’s preschool, which once had waiting lists, now operates at just 40% capacity after losing dozens of 4-year-old enrollments to transitional kindergarten. Her business is operating at a loss, and she contemplates closure daily—a move that would eliminate 91 licensed childcare slots in a county where options are already scarce.

The crisis extends far beyond Moore’s center. A UC Berkeley study found that 167 preschools closed in Los Angeles County between 2020 and 2024, with researchers attributing this decline partially to the public preschool expansion. The problem stems from the economics of childcare: 4-year-olds, who require less direct supervision, typically subsidize the care of infants and toddlers who need more intensive staffing. Without this cross-subsidization, many private providers cannot afford to operate programs for younger children.

The Structural Flaws in California’s Approach

California’s approach differs significantly from other states that have implemented universal preschool. Colorado, Vermont, and Georgia allow families to choose between public schools and private centers for their free preschool options, creating a more mixed delivery system that supports existing providers. California, by contrast, channeled the expansion exclusively through public schools, creating direct competition with private providers without adequately supporting the broader childcare infrastructure.

This approach has benefited school districts and teachers’ unions by boosting public school enrollment during a period of declining birth rates, which increases state funding allocations. However, it has simultaneously destabilized the private childcare market that serves working families with needs beyond traditional school hours and calendars. The state’s voucher system, while expanded, still leaves over 20,000 eligible families in Los Angeles County alone waiting for subsidized care slots.

The Human Cost of Policy Implementation

The personal stories emerging from this crisis reveal the deep human impact of policy decisions. Shilpa Panech, who operated a preschool in San Ramon for 13 years, watched her enrollment of 4-year-olds drop from 24 to one before ultimately closing her center last month. Her emotional account of depleting family savings and accumulating debt to meet payroll highlights how policy changes can devastate small business owners who entered childcare out of passion rather than profit.

Meanwhile, working parents like Brittany Jackson face difficult choices between free public options that may not meet their scheduling needs and private providers who offer more flexibility but at significant cost. The very families that universal preschool was intended to help may ultimately suffer from reduced options and increased competition for scarce infant and toddler care slots.

A Question of Democratic Principles and Policy Execution

From a democratic perspective, the transitional kindergarten expansion raises critical questions about how we implement well-intentioned policies without undermining existing systems. The fundamental principle of government intervention should be to expand freedom and choice, not inadvertently restrict it. When policies create winners and losers in such dramatic fashion, we must question whether the approach truly serves the public good.

Governor Newsom’s vision for universal preschool was morally sound and politically courageous. Early childhood education provides documented benefits for child development and enables parental workforce participation. However, the execution has failed to account for the complex ecosystem of childcare providers that working families depend on. This failure represents a breakdown in the democratic process—a lack of sufficient stakeholder engagement and impact analysis before implementing sweeping changes.

Toward a More Balanced Solution

The solution lies not in abandoning universal preschool, but in creating a more inclusive system that supports both public and private options. Several approaches could help mitigate the damage: requiring school districts to partner with private providers for after-care programs, increasing voucher funding to cover actual costs, and creating transition support for providers shifting to serve younger children exclusively.

Patricia Lozano of Early Edge California rightly notes that the state must ensure abundant options for all parents while maintaining private centers that serve younger children. This balanced approach recognizes that different families have different needs—some benefit from school-based programs while others require the flexibility and specialized care that private providers offer.

Preserving Liberty While Expanding Access

The core democratic value at stake is liberty—the freedom for parents to choose childcare that meets their family’s unique needs and the freedom for providers to operate sustainable businesses serving their communities. Good policy should expand choices rather than restrict them, should support entrepreneurship rather than undermine it, and should consider unintended consequences before they devastate vulnerable populations.

California’s childcare crisis serves as a cautionary tale for policymakers nationwide. As we work toward universal early childhood education, we must remember that the means matter as much as the ends. True progress comes not from top-down mandates that disrupt existing systems, but from collaborative approaches that strengthen the entire ecosystem of care. The children of California—and their hardworking parents—deserve nothing less than policies that expand both access and choice while preserving the diverse providers that make quality childcare possible.