University Business - February 2011 - (Page 42)

To Lease or Not to Lease? Computer equipment is an obvious Category ChoiCe for institutions unfamiliar with leasing. here are other equipment types worthy of a lease option look: • Food service: Campuses with self-operating dining programs don’t consider financing as much as they could, says gary Link of e&i Cooperative purchasing. While large freezers and ovens aren’t replaced too often, they can still be good candidates for financing. • Farm: for land-grant institutions in particular, leasing agricultural equipment or farm machinery, such as John Deere tractors, may be the right approach, Link says. • medical: “X-ray equipment, or almost anything in the healthcare field where technology is advancing too quickly, is clearly an area you don’t want to buy,” says David Jones of the Coalition for College Cost savings. “in two years, your competition is going to have something newer than you and you’re going to have to keep up.” • security: it’s an area that institutions could probably be doing more leasing in, according to Link, who points to security cameras, emergency broadcasting equipment or signage, and electronic access equipment as examples. • Furniture: “it doesn’t often jump to people’s minds that it might be an opportunity for leasing, but we’ve found it in the past to be very strategic,” says Jones. rather than all furniture, he’s referring to items placed in public areas of key buildings on campus, such as recruitment offices, development areas, and perhaps front rooms in dorms—“where you want things to look fresh and new.” What about vehicle fleets? While car leases are quite common among consumers and campuses that outsource their fleet management certainly have both lease and own options, Link says leasing doesn’t exactly fit the recent economic situation. over the past three years, he has seen institutions keeping their cars longer than in the past. Jones says, “if you think about a vehicle that moves in the confined space of a university campus where the trips are only a mile or two at a time, it can take a long, long time for those vehicles to get 60,000 or 70,000 miles on them. as a result, it’s much better to buy than to lease.” Larger PC orders are one type of equipment that Carlow U officials have leased. The Lease Piece and customary terms and conditions for the industry,” he explains. “An individual school might not be able to have the clout to argue those terms away.” 10. Funding out clauses are worth asking about. In Link’s experience, nearly all public universities, and perhaps some private institutions, can qualify for such a clause, which allows for getting out of the lease without penalties or charges, should funds not be appropriated or approved. 11. Supplemental warranties should be considered. As Peterson explains, if Merced has a five-year lease on equipment where the standard warranty is three years, these kinds of programs are a good idea. “We learned that the hard way last time,” he says, adding that administrators held their breath and the extended warranty wasn’t needed. 12. Agreements should note that normal wear and tear is allowed. “Schools can face an uncertain cost at the end of the lease term because things like this are not disclosed adequately in writing,” cautions Wiedenhofer. Dents and dings qualify, although damage requiring replacement would not. 13. Lease length matters. To help determine the ideal length, Cuno suggests checking surveys from Gartner, Forrester, and other research firms for the optimal life cycle of a particular type of equipment. 14. Disposal should be duly noted. Some financing companies offer disposal services as a standard part of the lease contract, others use contracts that would require an add-on, says Doucette. As Wiedenhofer points out, a leasing company is often better connected 42 | February 2011 Maverick Leasing: Taking Control in a prior position Within Campus proCurement, gary Link of e&i Cooperative purchasing did some digging and learned of departments that were leasing everything. “there were no controls over what they could and could not lease. if they didn’t have the money to buy it, they were financing it,” he recalls. “you have to be careful you’re not financing the future of the institution.” his department began putting parameters around what constitutes a lease and how much an expenditure would have to be for leasing to be an option. that helped curb the amount of “maverick leasing” on campus greatly, he says, adding that it tended to happen with items such as copiers and printers in the mid-dollar range when department leaders had neglected to put them in their capital budget for approval. With higher education being so decentralized, acting as the lease police can be challenging. he advises pouring over financial records to get a sense of what is out there across campus, and asking department heads to justify why they may have, say, a Cadillac copier when a simple multifunctioning device would do. “We were able to get our arms around our situation,” he says, although “it took a while.” universitybusiness.com http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - February 2011

University Business - February 2011
Table of Contents
Editor’s Note
College Index
Company Index
Advisory Board
Behind the News
Viewpoint
Internet Technology
Say it With Signage
A Bursar’s Best Friend
The Lease Piece
Don’t Stop Thinking About the Future
Say it With Signage
Independent Outlook
What’s New
End Note

University Business - February 2011