A teacher at a Morgan Hill, Calif., preschool has been arrested after the school accused her of slipping sleeping pills in sippy cups of children under the age of 2.

"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.

(Morgan Hill Police Department)

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.

The school's statement said it now was "actively working with the authorities and California State Childcare Licensing to aid in their investigation."

Gratz was charged with two counts of child endangerment and released on her own recognizance. She was set to appear in court later this month, police said.

She did not return telephone calls from ABC News.

Gratz was responsible for 10 children, all under the age of 2, Hoefling said.

After the witness told school officials about Gratz apparently putting a substance in the sippy cups, facility administrators confronted Gratz, who then allegedly admitted to those administrators that she slipped sleeping pills into the toddlers' cups, a police news release said.

"The pills that she said were used were Sominex, which is over-the-counter sleep aid medicine," Hoefling said.

Police said they were notified on Monday, when they arrested Gratz and before serving a search warrant at her home that evening. While the teacher allegedly admitted to the accusations, police said, she had not yet commented on a motive.

"We've contacted all 10 parents [of the children] that were under her care. We've received 30 to 35 phone calls, either past or present parents at the Kiddie Academy, so we're still trying to determine if this has been going on for some time," Hoefling said. "We don't think it's a one-time occurrence."

Bianca Flores, whose 2-year-old was under Gratz's care until several weeks ago, told ABC News station KGO the academy did not tell her the reasoning behind the teacher's firing. Instead, she found out from her sister, who saw it on the news.

"Sickening, sick to my stomach, I want to throw up," Flores told KGO. "I'm not angry, I'm just sad. Disturbing. I don't know what to think."