Transcript Improve Technology by Leasing with MMF

Budget Friendly Technology
Leasing Solutions
Service Associate Member of Illinois ASBO
Introduction
Leasing Basics
Overview
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
[email protected]
John Vonder
V.P. of Business Development
MMF Leasing
(847) 412 - 0397 x161
[email protected]
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?
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Computer Hardware
Software
Network Equipment
Printers & Copiers
Telephone Systems
And Much More!
What are the benefits?
• Financial
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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.
B.
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Equipment = $300,000
Year 1 Purchase = $300,000
Maintenance Beyond Warranty =
$6,000 (est.2% for direct expense)
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
$1 Purchase Option
•Lowest Cost of Funds
•Often a tax-exempt lease
•Flexible end of lease
options
•Fixed ownership at the
end of the lease
•Ideal in setting up an
equipment replacement
program
•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
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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
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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
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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
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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