Buying vs. Leasing and Outsourcing Technology January 19, 2007 Downers Grove, IL

Leasing vs. Buying Service Associate Member of Illinois ASBO

Overview Introduction Leasing Basics Leasing Benefits Leasing Programs Leasing Partners Leasing Process Success Stories When to Lease & When to Buy

Introduction of Leasing Presenters Jason Marquardt Director of Sales American Capital (630) x118 John Vonder V.P. of Business Development MMF Leasing (630)

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? Conservation of Capital (100% Financing) Consistent Budget Avoid Technology Obsolescence –Minimizes break/fix time –Reduces user/teacher frustration Lowest Cost of Funds Disposal issues eliminated Asset Management/Tracking

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

Leasing Process Obtain planning costs (equipment & lease) Select equipment supplier & lessor (bid?) Board approval Documentation Equipment ordering & delivery Acceptance and Lease Commencement

Success Stories Local K-12 School District –Challenge: Technology obsolescence and increasing technology staff costs –Solution: 3 year refresh program –Benefits: Less staff time spent on break-fix work. Students and Teachers no longer dealing with obsolete equipment.

Success Stories Local K-12 School District –Challenge: Large technology acquisition needed on a limited budget –Solution: 5 year tax-exempt lease –Benefits: Low payments spread out over 5 years and structured to keep the technology budget level

When to Lease & When to Buy When to Lease –Desire consistent budget –Desire to conserve capital –Desire to maintain current technology When to Buy –Desire to self manage technology refreshment cycle –Excess capital available to spend now and in the future