A division of the University of Virginia recently recommended that Albemarle County and Charlottesville take a serious look at using private investment to fund preschool programs for economically disadvantaged 3-year-olds.

The Pay for Success Lab, which operates out of the Social Entrepreneurship program at the University of Virginia’s Frank Batten School of Leadership and Public Policy, released a report recommending that the local school divisions institute a governing body to unify services for at-risk children from birth to 5 years old and conduct a feasibility study of soliciting private investment to fund preschool access for 3-year-olds.

“Pay for success” is a funding strategy, also known as “social-impact bonds,” whereby private investors pay up front for a program, with an agreement from a payor, often a local government, that says if certain benchmarks are met, investors will be given a return on their investment.

The benefit for payors, said Josh Ogburn, director of the Pay for Success Lab at UVa, is determining if a program is viable before committing the organization’s own funds — in this case, local taxpayer dollars — to it.

“Currently, governments are making funding decisions on an annual basis,” Ogburn said. “With this, they are going to start to see whether a program is working and then see if the outcomes worked … If it worked, there is a strong argument to keep funding it.”

The governing board of providers for services for infants to 5-year-olds, the report said, could serve to align existing services in the city and county.

The report recommends that once the governing body is in place, the city and county should partner with an outside company to determine the feasibility of using a pay for success model to reach 3-year-olds.

Using data compiled in a fiscal map study by the Charlottesville-Albemarle Early Education Task Force, the Pay for Success Lab estimated that there are 522 unserved, at-risk 3-year-olds in the city and county.

Charlottesville has 60 slots in a city-run preschool program for 3-year-olds (with 17 currently on a waiting list), but no such program exists in the county.

The task force, led by the United Way-Thomas Jefferson Area, has focused its efforts over the last two years on expanding access to high-quality preschools for at-risk area 4-year-olds.

The task force announced last year that it had managed to connect 90 percent of the city population and 70 percent of the county population of 4-year-olds with services.

While that work continues, said Erika Viccellio, area United Way vice president and chairwoman of the task force, the group will keep its attention on the older children.

“We have been making such progress on our goal of placing all at-risk 4-year-olds, and we do not want to be deterred from that,” she said. “At the same time, we know from the fiscal map that there are many unmet needs in the 0 to 3 range.”

The group’s laser focus on 4-year-olds is thanks mostly to availability of funding, Viccellio said.

Funding for 4-year-olds exists through the Virginia Preschool Initiative, which the task force has been able to leverage to expand coverage in both the city and county. Those dollars do not exist for 3-year-olds, which makes expanding access for younger children much more difficult.

“Part of the intrigue is that the funding for 3-year-olds would need to look totally different,” she said. “We are sort of starting from scratch because there are no VPI dollars, there are no creative models that we are aware of yet.”

That’s where the Pay for Success Lab comes in.

“The opportunity here was to learn about a funding mechanism that many people do not know about,” she said.

The work of the early education task force, Ogburn said, bodes well for the prospects of a pay for success program working here.

“They have this commitment to organized early childhood health and education programs, very strong data systems … and they have an outcomes-based mentality already,” he said. “And there is a target population that could be served, and that is 3-year-olds.”

County officials said they support the work of the Pay for Success Lab but for now are focused on 4-year-olds.

“I support anything that will expand access … but, from our perspective, right now our focus has to be on 4-year-olds,” said Ann McAndrew, coordinator of Albemarle County’s Bright Stars program.

County schools officials said the division would need to consult with the city school division and the rest of the early education task force before committing to a pay for success model.

“Right now, in partnership with the United Way and Charlottesville City Schools, we’re focused on increasing the total number of 4-year-olds we serve, so, before moving forward in any concrete way, we would need to further discuss the issue with our partners,” said Tim Shea, county schools legislative and public affairs officer.