"We do not know the quantity, but we believe she was breaking the pill into smaller pieces and putting it into the children's sippy cups," Morgan Hill Sgt. of Investigations Troy Hoefling told ABC News.
The school told ABC News it had "terminated" Debbie Gratz, 59, last Friday "for failure to follow Kiddie Academy standards and processes."
"Ms. Gratz was witnessed adding a substance to the water cups for her classroom of 10 children," Morgan Hill Kiddie Academy added in a prepared statement. "The cups were confiscated before they came in contact with any children prior to the academy opening for business that day."
A fellow employee saw Gratz place an unknown substance in the toddler's sippy cups on Friday and notified school officials, according to Morgan Hill Police - though police apparently weren't told until Monday.
"They made notifications internally. Unfortunately, the problem with that is not only do we not get on the case right away but we lose precious evidence," Hoefling told ABC News. "We only found out those cups had been washed out and rinsed."
Police said they had no plans to charge the school regarding the delay in reporting the incident, but the district attorney could review the matter.
Image: Sippy cup, via Shutterstock