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) x118 John Vonder V.P. of Business Development MMF Leasing (847) x161 Moderated by: Alan McCloud Asst. Superintendent for Elementary Education & Supervisor of Technology Batavia Public School District 101 (630) 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 Lease A. Equipment = $300,000 Payment 1 = $100,000 Payment 2 = $100,000 Payment 3 = $100,000 B. Interest earned on $ not spent = $15,000 Interest Year 1 = $10,000 (5%) Interest Year 2 = $ 5,000 (5%) TOTAL COST (A-B) = $285,000 Purchase A.Equipment = $300,000 Year 1 Purchase = $300,000 B.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 lease programs 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-Life Technology 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