Budget Friendly Technology Leasing Solutions Service Associate Member of Illinois ASBO.
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Transcript of Budget Friendly Technology Leasing Solutions Service Associate Member of Illinois ASBO.
Budget Friendly Technology Leasing Solutions
Service Associate Member of Illinois ASBO
Overview
Introduction
Leasing Basics
Leasing Benefits
Leasing Programs
Leasing Partners
Steps to Implement a Refresh Program
Disposing End-of-Life Technology
Case Study: Batavia School Dist. 101
Introduction of Leasing Presenters
Jason Marquardt
Director of Sales
American Capital
(630) 512 - 0066 x118
John Vonder
V.P. of Business Development
MMF Leasing
(847) 412 - 0397 x161
Moderated by: Alan McCloud
Asst. Superintendent for Elementary Education & Supervisor of Technology
Batavia Public School District 101
(630) 879-4600 x4018
What is a lease?
• By definition, a lease is a contract by which one acquires equipment for a specified period of time for a specified rent paid to the lessor.
• For Schools, a lease is a way to acquire and/or finance equipment without voter approval.
• Leasing does not constitute public debt.
What can be leased?
• Computer Hardware• Software• Network Equipment• Printers & Copiers• Telephone Systems• And Much More!
What are the benefits?
• Financial– Conservation of Capital (100% Financing)– Consistent Budget– Lowest Cost of Funds– Disposal issues eliminated
• Improve User & Administrator Satisfaction– Avoid Technology Obsolescence
• Minimizes break/fix time• Reduces user/teacher frustration
– Asset Management/Tracking
Lease vs. Purchase
LeaseA. Equipment = $300,000
Payment 1 = $100,000Payment 2 = $100,000Payment 3 = $100,000
B. Interest earned on $ not spent = $15,000Interest Year 1 = $10,000 (5%)Interest Year 2 = $ 5,000 (5%)
TOTAL COST (A-B) = $285,000
PurchaseA. Equipment = $300,000
Year 1 Purchase = $300,000B. Maintenance Beyond Warranty =
$6,000 (est.2% for direct expense)C. Disposal = $3,000
TOTAL COST (A+B+C) = $309,000
*Indirect Costs Not Included = IT labor to manage/fix old equipment, Curriculum opportunity costs, Efficiency costs of slower/under performing equipment
What type of leaseprograms are available?
Fair Market Value
•Lowest Cost of Funds
•Flexible end of lease options
•Ideal in setting up an equipment replacement program
$1 Purchase Option
•Often a tax-exempt lease
•Fixed ownership at the end of the lease
•Ideal for infrastructure or software projects.
Lease Partners - Banks
• Strengths– Competitive pricing for a tax-exempt lease– Often a local trusted partner
• Weaknesses– Limited leasing expertise– Rarely participate in FMV/Refresh leases
Lease Partners – Vendor Financing
• Strengths– Simplified process– Occasional vendor discounts to offer below
market rates
• Weaknesses– Rates are often higher– Limit a district’s flexibility on brands to lease
Lease Partners – Independent Lessor• Strengths
– Niche expertise– Diversity in structures available to district– Flexibility to combine multiple brands– Competitive pricing
• Weaknesses– Reliance on funding partners– Unknown brokers often use unfavorable
contracts
Steps to Implement a Refresh Program
• Evaluate & chart present inventory• Obtain planning costs (equipment & lease)• Select equipment supplier & lessor (bid?)• Board approval• Documentation• Equipment ordering & delivery• Acceptance and Lease Commencement
Disposing End-of-LifeTechnology
• Donate• Recycle• Storage• Sell to students, parents, faculty & community• Secure your data• Document your asset transfer• Investigate your partners
Success Stories:Batavia School District 101
• Situation before 2000• Steps taken to evaluate process• Implementing the refresh program• Feedback from students, parents, faculty, & board• End-of-lease sales process• Things to avoid• Things that worked well