Going Green! Recycle, Refresh and Replace, Oh My! Jason Marquardt American Capital Financial Services John Vonder Providence Capital Network IASBO Annual Conference St. Charles, IL May 20, 2010

Providence Capital Network, LLC Experienced in supporting more than 100 Schools with: Equipment Leasing – Computer Equipment – Software – Copiers – Security Systems – Telecommunications – Transportation – & More End of Cycle Remarketing/Disposal – Laptops – Desktops – Monitors – Servers – Routers – Telecommunications Member of IASBO and other ASBO organizations Management experience serving on a school board

Independent Equipment Lessor for Schools – Laptops, Desktops and Servers – Monitors – Printers and Copiers – Athletic Equipment – Phone Systems – Buses and Vehicles – And Much More Member of Illinois ASBO since Frequent contributor to IASBO Quarterly Newsletter Headquartered in Lisle, Illinois. American Capital Financial Services, Inc.

IT Recycling – The Facts E Waste in 2007 – Was it Trashed or Recycled? Products Total** Trashed Recycled Recycling Rate (millions) (millions) (millions) (weight) Televisions % Computer Products* % Cell Phones % *Computer products include CPUs, monitors, notebooks, keyboards, mice, and “hard copy peripherals”, which are printers, copiers, mfp’s and faxes. **These totals don’t include products that are no longer used, but stored. Source: EPA 1

Why Recycle? Protecting the Environment Hazardous material is prolific in electronics. These substances can cause problems if the products are not properly managed at end of life. Lead is used in glass in TV and PC cathode ray tubes as well as solder and interconnects; older CRTs typically contain on average 4 lbs of lead (sometimes as much as 7 lbs in older CRTs), while newer CRTs contain closer to 2 lbs of lead. Mercury is used in small amount in bulbs to light flat panel computer monitors and notebooks. Brominated flame retardants are widely used in plastic cases and cables for fire retardancy; the more problematic ones have been phased out of newer products but remain in older products. Cadmium was widely used in rechargeable batteries for laptops and other portables. Newer batteries (nickel-metal hydride and lithium ion) do not contain cadmium.

Why Recycle? Abiding by the Law Some electronics (such as color CRTs computer monitors, color CRT TV tubes, and smaller items such as cell phones and other “hand- helds”) test “hazardous” under Federal law. If so, they are subject to special handling requirements under Federal law, subject to certain exemptions. Currently, legislation is not agreed up on the Federal level, but almost all 50 states have or are reviewing legislation regarding the proper disposal of electronics.

A Look at ILLINOIS On September 17, 2008 Senate Bill 2313, sponsored by State Sen. Susan Garret, D-29th, of Lake Forest, was signed into law which establishes statewide goals for the recycling and reuse of electronic devices. It also bans the disposal of those items in landfills starting on January 1, 2012! The program establishes a special fund paid for by manufacturers that will be used to pay for electronic collections throughout the state.

Qualifying your Recycler (from the R2 Policy, written and adopted Oct. 30, 2008) Your recycler should HAVE a documented management system that covers environmental, worker safety and public health practices on-site and downstream management of end-of-life (EOL) equipment and materials. This may or may not be a ISO System. Comply with environmental, health, and safety legal requirements, both domestically and internationally, that are applicable to the recyclers' operations Use practices to reduce exposures and emissions during recycling operations. Send EOL equipment and all material derived from this equipment, that contain focus materials, CRTs, CRT glass, circuit cards, batteries, and items containing mercury, only to facilities that are properly licensed to receive these materials, and use technology designed to safely and effectively manage these materials - whether in the U.S. or another country;

Qualifying your Recycler (from the R2 Policy, written and adopted Oct. 30, 2008) Your recycler should Ensure that an electronics recycler does not use energy recovery, incineration, or land disposal as a management strategy for focus materials or equipment and components containing focus materials. Exercise due diligence in ensuring that downstream recyclers and processors manage recycled materials appropriately, throughout the downstream recycling chain. Ensure that materials going for reuse are refurbished and tested for functionality, and residual focus materials are managed responsibly;

Qualifying your Recycler (from the R2 Policy, written and adopted Oct. 30, 2008) Your recycler should Track throughput and keep records; store and transport material securely and safely; and possess insurance, closure plans, and financial mechanisms to cover the potential risks of the facility. In general, the export of electronics except in cases where full documentation of working gear sold for reuse is clearly shown, is strongly discouraged, due to the lack of proper environmental control and policies. Ensure that personal data on EOL electronics going to reuse or recycling are cleared or destroyed Your recycler should have a clear and documented plan to handle data both on a software level, up to and including the DOD level of security and a physical destruction model for storage devices that cannot be properly rewritten.

Why Create A Refresh Program? To advance technology within the classroom. To reduce technology costs within the District. (Warranty issues) To eliminate headaches associated with a mix/match of equipment. (OS issues) To support the educational needs now and in the future.

Why Create A Refresh Program? (continued) State driven mandates for compliance. Eliminate disposal costs and headaches. “Going Green” initiatives (energy costs) Stay current with software licensing and other total cost of ownership costs.

What Are The Initial Steps? Get a detailed count of your current environment. (# of machines, location, age, etc) Figure the future needs of the District. (increase/decrease of users, types of usage, programs, etc) Determine what a reasonable annual deployment schedule could look like? Investigate if there are any financial constraints tied to technology.

What Are The Initial Steps? (continued) Discuss the concept with the Board of Education and District Administration. Discuss the concept with vendor partners. (equipment suppliers, leasing co’s, etc) Set aside time to determine deployment goals with IT staff. Kick off the program.

How Can It Be Implemented? By School Location (per building) By Grade Level By Building Type (K-12 District’s) By User (Students, Teachers, Administrators)

What Are Some Of The Pitfalls to Avoid? Unequal Distribution of Resources (jealousy amongst users). Lack of Administration Commitment. Re-alignment of Financial Resources. Different equipment models, operating systems.

How Can Leasing Play a Role? Leasing can reduce the financial cost of technology within the District. (0% or below) Leasing can help create a balanced budget, with even annual expenditures. Leasing can help avoid equipment obsolescence. Leasing can eliminate the disposal costs and headaches associated with refresh.

Lease vs. Purchase ($100,000 of computers) Lease Payments ($32,000/year x 3) = $96,000 No out of warranty costs Easy to forecast Purchase Purchase = $100,000 Break/Fix costs Indirect costs for unreliable equipment (user frustration, downtime)

IT Resale (Replace) Reuse can be an effective mechanism for recovering value and extending product life Resale should be considered for working equipment generally less than 5 years old for: Computer equipment Networking equipment Cellular telephones Business telephone systems Associated Peripherals.

Benefits Careful observance of the life cycle of electronics and increased velocity of retirement will benefit the owner/lessor economically in the EOL management. Working electronics, less than 5 years old, should have residual value. This residual value can be used to purchase or lease new or slightly used electronic equipment. This residual value may also support the cost of reverse logistics and equipment removal as well as the recycling of non working gear.

Best Practices for Resellers Reseller should provide reverse logistics both safely and cost effectively. Logistical coordination between the IT Recycler/Reseller is critical for cost savings. Reseller should provide full asset tracking, both serialization and asset tag tracking where applicable. Data protection should be a number one priority for the IT Reseller/Recycler. Data destruction certification should be required by the owner/lessor of the material. Resale channels should be multi-tiered, including international channels, on line channels, as well as domestic refurbishers and resellers, and other end users (schools).

Reselling Maintain an inventory of equipment Specifications Year Acquired Quantity Provide the inventory list to a qualified remarketer/recycler Evaluate their qualifications, pricing, process, & references Evaluate merits of selling equipment to constituents through the remarketer Revenue Maximization or Discounted Equipment Obtain proper documentation

Successful Tech Rotation Programs Refresh Lease 3 or 4 year terms Leasing company owns the equipment Leasing company is responsible for disposal/liquidation Total payments are less than the cost of the equipment Capital Lease with Remarketing in the Future 3, 4, or 5 year terms School owns the equipment Leasing company liquidates what you don’t want to keep and returns significant revenue back to the school