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
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