The daycare says the children didn't see him, but an employee said she did and called police. Investigators say Murphy walked up to the fence and watched the kids for a few more seconds before running off.
"The world is just, you know, some people are just disturbed," Debbie Herod said.
Her teenage daughters go to school next door. She can't believe something like this happened.
"It could have happened at my babies' school. Just you never know," Herod said.
Her husband Marcus says he'd take matters into his own hands if he ever saw a man touching himself around children.
"If I saw him doing that, I mean, he would be in trouble. I mean, I think I'd be in trouble with him. I mean, that's not right. You don't just do stuff like that."
Murphy, who's classified as a violent sex offender because of two rape convictions, was allegedly spotted outside the daycare again later in the day. Police caught and arrested him after a parent called 911.
"I'm glad he's caught," Debbie said.
She and her husband say Murphy needs serious help.
"He must be lost in the mind I guess, you know?" Marcus said.
"I mean, he needs some mental evaluation done, you know, because it's something going on in your mind for a person to do that and have no remorse about babies in the presence," Debbie said.
Murphy is charged with indecent exposure. He'll face a judge Thursday.