Editorial: State preschool plan is ruining the daycare market

One of Gavin Newsom’s most highly touted accomplishments was to provide $2.7 billion in state funding to create free universal transitional kindergarten for every 4-year-old, It was one of his core campaign promises. He signed the law in 2021, but the program became fully operational in January after a five-year rollout. These children “can start their schooling on the right track, setting them up for success further down the road,” Newsom proclaimed.

Essentially, the program provides an extra year of elementary school, thus offering an additional grade of public schooling for every child of that age group regardless of family income. It’s too early to judge the program’s success, which as Newsom said is designed to yield benefits far into the future. However, the state already is seeing serious blowback. For instance, a CalMatters investigation found that the new program is helping drive private pre-schools out of business.

The publication pointed to a Los Angeles County report finding that “167 preschools closed between 2020 and 2024 — a decline in child care spots that researchers attributed partly to the addition of the public school grade.” Basically, it reported, the law stripped away many private preschool customers, thus forcing those schools to cater more to infants, whose care is more labor intensive. The private preschools “can’t “always pencil out financially.”

The 2021 law requires all public schools to offer transitional kindergarten. Although not mandatory, the participation rates, per the Public Policy Institute of California, have soared as eligibility dates have fallen and subsidies have increased. Although participation rates vary widely by county, they are above 83% in some, such as Orange County. It’s basic economics. If the state provides daycare at no cost, most of those parents will use it rather than pay for costly, private alternatives. 

So it’s no surprise that the private marketplace is drying up. That creates higher costs on parents who struggle to find daycare for their kids before their kids hit the eligibility age. Other state laws have also stressed that preschool market. For instance, Newsom signed a 2019 law that allows child-care workers to unionize. That mainly harms the state budget, as most of the affected workers are paid with state subsidies. But those subsidies drive up wage rates and therefore also impact private daycare providers.

We’ve always wondered why a state public school system that consistently fails at its job should be tasked with expanding to another grade, but that consideration has long been ignored. Reports show California’s K-12 test scores still lag behind pre-pandemic levels. Transitional kindergarten advocates claim that an extra year of schooling will help, but at that age it’s mostly daycare — and we’d expect the private sector to provide a better service.

At least the state should monitor progress if it wants to boost educational results. But, as LAist recently reported, “California itself hasn’t evaluated the [transitional kindergarten] program as it’s expanded, nor does it have plans to going forward.” Meanwhile, “another state’s public preschool program that found students tested lower on state assessments and had more behavioral problems compared to those who weren’t in that program.”

Newsom may be right that we’ll see transitional kindergarten’s results down the road, but we’re already getting a preview: higher taxpayer costs and fewer private daycare options.