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On Sunday January 8, 2012 the Knesset approved a new law stating that education would now be free for children starting at the age of three. This law was passed by creating budget cuts in the government ministries. The law was originally not going to be passe due to people against the budget cuts, but an agreement was met with the Shas political party. This agreement boosted the votes to reach more then the majority passing the law. 

As Elad Benari reported in a Arutz Sheva 7 article on January 9, 2012 "Free education for children at an early age was an important part of the report of the Trajtenberg Committee for Social and Economic Change, which was established in response to the massive “social justice” rallies that dominated Israeli news over the summer." There will also be after school care, and programs kids can go to, no matter what their parents wages are. 

Reference: Elad Benari, "Knesset Approves Free Education From Age 3," Arutz Sheva 7, January 9, 2012. Acessed January 8, 2012, http://www.israelnationalnews.com/News/News.aspx/151527#.TwpPapjajao