budget friendly technology leasing solutions

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

jmarquardt@americancapital1.com

John Vonder

V.P. of Business Development

MMF Leasing

(847) 412 - 0397 x161

jvonder@mmfleasing.com

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