"Three families told me this week."
That's what we're hearing from providers across California this spring. Three families — sometimes five, sometimes eight — telling their daycare owner the same thing: We're moving to TK in the fall. It's free.
You already know this is happening. You've seen the Facebook posts, the enrollment spreadsheets with more gaps than names, the quiet math of wondering whether you can stay open next year with six fewer four-year-olds.
The transitional kindergarten expansion is already reshaping California's childcare landscape — and the impact on daycare enrollment is accelerating. ReadyRule tracks all 28,586 active licensed childcare facilities in the state. The numbers tell a clear story.
2025-2026 is the first school year where every child turning four by September 1 is eligible for TK. Not a phase-in. Not a pilot. Universal. Free. At your local public school.
And while TK is good for families — genuinely, it is — the data shows what it's doing to the childcare providers who've served those families for years.
The Numbers Are In
We track every licensed childcare facility in California — 28,586 currently active. Here's what the closure data shows.
2025 Was the Worst Year on Record
| Year | Facilities Closed | Childcare Slots Lost | YoY Change |
|---|---|---|---|
| 2020 | 1,244 | 35,916 | — (COVID baseline) |
| 2021 | 1,795 | 52,892 | +44.3% |
| 2022 | 1,981 | 54,587 | +10.4% (TK expansion begins) |
| 2023 | 1,907 | 54,443 | -3.7% |
| 2024 | 2,120 | 66,671 | +11.2% |
| 2025 | 2,341 | 80,538 | +10.4% |
| 2026 (through Feb) | 260 | 9,245 | On pace for ~1,600 |
Since 2020, California has lost 11,388 childcare facilities and 344,047 childcare slots.
And it's accelerating. 2025 saw more closures and more capacity lost than any previous year — surpassing even the pandemic shakeout of 2020-2021.
It's Not Just Centers — FCCs Are Closing at the Same Rate
| Year | Centers Closed | Family Child Care Closed |
|---|---|---|
| 2020 | 581 | 663 |
| 2021 | 815 | 980 |
| 2022 | 904 | 1,077 |
| 2023 | 910 | 997 |
| 2024 | 1,074 | 1,046 |
| 2025 | 1,178 | 1,163 |
The narrative that TK only affects large centers is wrong. Family childcare providers are closing at nearly identical rates. Solo operators running home-based programs are just as vulnerable — often more so, because they have fewer financial reserves.
The Counties Hit Hardest
| County | Closures Since TK (2022-2026) | 2025 Alone |
|---|---|---|
| Los Angeles | 1,663 | 396 |
| San Diego | 841 | 268 |
| Santa Clara | 696 | 204 |
| Orange | 467 | 127 |
| Sacramento | 461 | 124 |
| Alameda | 459 | 133 |
| Riverside | 404 | 111 |
| San Bernardino | 304 | 73 |
| Contra Costa | 272 | 74 |
| San Mateo | 236 | 66 |
Los Angeles County alone has lost 1,663 facilities since TK expansion began in 2022. For context, a UC Berkeley study of LA County (December 2025) counted 167 preschool center closures in the same period — they were looking at a narrow subset. Our data shows the full picture: 919 centers plus 972 family childcare homes closed in LA County from 2020-2024.
TK Enrollment Has Doubled
| School Year | TK Enrollment | Eligibility |
|---|---|---|
| 2021-22 | ~75,000 | Birthday between Sept 2 - Dec 2 |
| 2022-23 | Expanded | Birthday through Feb 2 |
| 2023-24 | ~151,000 | Birthday through April 2 |
| 2024-25 | Growing | Birthday through June 2 |
| 2025-26 | Universal | All turning 4 by Sept 1 |
151,000 children are already in TK classrooms. With universal eligibility this year, that number is climbing toward the full ~400,000 four-year-olds in California.
Meanwhile, 61% of childcare centers report enrollment declines among four-year-olds (Center for the Study of Child Care Employment, 2023). 46% of family childcare providers report the same. Most did not replace those children with younger enrollees.
Why This Hurts More Than It Should
The financial pain of losing four-year-olds goes beyond the obvious revenue gap. Here's the math most people don't see:
Four-year-olds subsidize infant care.
Older children require lower staff ratios (1:12 for preschoolers vs. 1:3 for infants). They need less intensive supervision. Their tuition helps cover the higher labor costs of caring for babies and toddlers.
When four-year-olds leave for free TK, the remaining younger children can't generate enough revenue to sustain the operation. The profitable age group is the one walking out the door.
The Staffing Double-Hit
It's not just enrollment. 65% of childcare businesses report that TK has impacted their staffing:
- 27% say staff have left or plan to leave for school district TK jobs
- Public school TK teachers earn significantly more than private preschool teachers
- School district jobs come with benefits, pensions, and predictable schedules
You're losing children and the teachers who taught them — to the same employer.
The Hold Harmless Cliff: June 30, 2026
If you receive state subsidies, this date should be circled on your calendar.
California has been allowing subsidized childcare centers to retain their pre-pandemic funding levels even as enrollment dropped. This "hold harmless" policy has been a lifeline for centers losing four-year-olds to TK.
It expires June 30, 2026.
Starting in the 2026-27 fiscal year, providers will be funded based on the lesser of:
- Their contract maximum
- Actual program costs
- The contract rate per child day of actual enrollment
That third one is the problem. If your enrollment has dropped because four-year-olds left for TK, your funding will now reflect that drop. Centers that have been operating at lower enrollment but higher funding are about to feel the full financial impact.
Given that 2025 already set the closure record at 2,341 facilities, the expiration of hold harmless funding could push 2026 even higher.
You Can't Compete With Free — But You Can Compete With Inconvenient
Here's the thing about TK that the enrollment numbers don't tell you: TK runs 3 to 4 hours a day.
That's 8:30 AM to noon in most districts. Which means working parents who enroll their child in TK still need care for the other 6-7 hours. They need before-school drop-off. They need after-school pickup. They need someone covering school holidays, teacher in-service days, and the two-week winter break.
Public schools don't do that. You do.
What Providers Are Actually Doing
We've been tracking how California providers are adapting. Here's what's working — and what's harder than it looks:
Wraparound care for TK families — Most accessible strategy
- Offer before-school (6:30-8:30 AM) and after-school (noon-6:00 PM) care
- Maintain the relationship with families who move to TK
- Requires transportation coordination with local schools
- Some providers are running shuttle services between their facility and nearby TK sites
Shifting to younger ages (0-3) — Expensive pivot
- Facility modifications required: cribs, changing stations, possibly sprinkler systems
- Dramatically different staff ratios: 1:3 for infants vs. 1:12 for preschoolers
- Need different training and potentially different staff
- Financial math is tough — infant care costs more to provide per child
- License modifications and permitting can take months
Enrichment programming — Smart differentiation
- Foreign language immersion, STEM, music, advanced arts
- Flexible scheduling that public TK can't match
- Appeals to families who want more than the standard TK curriculum
- Works especially well for part-time programs that complement TK hours
Extended and flexible hours — Competitive advantage
- Early morning (before 7 AM), evening, and weekend options
- Schools can't and won't do this
- Essential for parents working non-traditional schedules
- Positions you as the care solution, not the education competitor
The Equity Problem You Should Know About
Here's the data point that should bother everyone:
In LA County's wealthiest ZIP codes — like Brentwood — TK demand surged 148%. Families that were paying up to $36,000/year for private preschool jumped at the free option.
In the poorest ZIP codes, TK enrollment rose just 50%.
The families who benefited most from universal free TK were the ones who could already afford private preschool. Meanwhile, the childcare facilities that closed were disproportionately in lower-income neighborhoods — eliminating care options for the families who needed them most.
This matters for providers because it means the competitive pressure isn't evenly distributed. If you serve a higher-income area, you may have already lost your four-year-olds to TK. If you serve a lower-income area, you might keep more of them — but you're also more likely to depend on subsidies that are about to change.
What to Do Right Now
If you're reading this in spring 2026, parents are already making fall enrollment decisions. Some have already told you. Others haven't yet. Here's what to focus on:
This Month
-
Survey your current four-year-old families. Ask directly: "Are you planning to enroll in TK for fall 2026?" You need the number, not the assumption.
-
Model the revenue impact. For every four-year-old who leaves, calculate: monthly tuition lost x 12 months. Then factor in that you can't simply replace them with a toddler at the same ratio.
-
Research TK schedules at your local schools. What are the exact hours? Are they offering extended day TK? Is there an existing after-school program? This tells you where the care gap is.
This Quarter
-
Design your wraparound care offering. If you're going to serve TK families before and after school, figure out transportation, scheduling, and pricing now. Fall enrollment starts soon.
-
Talk to your local school district. Some districts are looking for private-partner after-school programs. If you're already licensed and staffed, you may be a natural fit.
-
Review your license capacity by age group. If you're shifting to younger children, check what facility modifications you need. Start the process early — permitting delays are common.
Before the Hold Harmless Expires
-
If you receive state subsidies, model the funding change. Calculate what your reimbursement looks like under enrollment-based funding vs. your current hold-harmless amount. The difference is your financial exposure after July 1.
-
Explore mixed-delivery partnerships. California allows families in TK to also receive subsidized early learning and care (including part-day CSPP) as long as hours don't overlap with TK. You may be able to serve TK families with state support during non-TK hours.
Key Dates: Your TK Planning Timeline
| Date | What Happens | What You Should Have Done |
|---|---|---|
| Now (Spring 2026) | Parents making fall enrollment decisions | Survey your 4-year-old families |
| April-May 2026 | School district enrollment opens | Have wraparound care plan ready |
| June 30, 2026 | Hold harmless subsidy expires | Know your funding exposure |
| July 1, 2026 | Enrollment-based funding begins | Have adjusted budget in place |
| August 2026 | TK school year starts | Wraparound services operational |
Frequently Asked Questions
How many childcare facilities have closed because of TK expansion? Since TK expansion began in 2022, over 8,600 California childcare facilities have closed — 4,066 centers and 4,283 family childcare homes through 2025, plus 260 additional closures in early 2026. In 2025 alone, 2,341 facilities closed, eliminating 80,538 childcare slots.
Does TK replace full-day childcare? No. TK runs 3-4 hours per day (typically 8:30 AM to noon). Working parents still need before-school, after-school, holiday, and summer care. TK replaces the educational component for four-year-olds during school hours only.
What is the hold harmless cliff? California has allowed subsidized childcare centers to keep pre-pandemic funding levels despite losing enrollment to TK. This policy expires June 30, 2026. After that, funding is based on actual enrollment — meaning centers that lost four-year-olds will see immediate revenue cuts.
Can I still serve families who enroll in TK? Yes. Wraparound care (before and after TK hours) is the most accessible strategy. California also allows TK families to receive subsidized care during non-TK hours through mixed-delivery partnerships.
Are family childcare homes affected too? Yes. 46% of family childcare providers report fewer four-year-olds since TK expanded. Our data shows FCCs are closing at nearly identical rates to centers — 4,408 FCC closures since 2022 vs. 4,201 center closures.
This Is Not the End of Childcare
Let's be clear: TK is not replacing childcare. It's replacing part of it — the educational component for four-year-olds during school hours.
Everything else — the early mornings, the late pickups, the full days during summer, the infant and toddler care, the flexibility that working parents depend on — that's still you.
The providers who thrive through TK expansion won't be the ones who try to compete with free public school. They'll be the ones who redefine what they offer: the care that wraps around education, not the education itself.
11,388 facilities have closed since 2020. 344,047 childcare slots are gone. The demand for childcare hasn't disappeared — it's shifted. The question is whether you shift with it.
This analysis is based on ReadyRule's tracking of all 28,586 active licensed childcare facilities in California. Closure data comes from the California Department of Social Services (CDSS) facility records, which ReadyRule monitors continuously.
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