Breaking Tech Budget Barriers for Schools: Part 2

Crash course: How Schools Benefit from Tech Leasing  

It helps them expand their budget dollars: Rather than paying outright for the technology today, the school makes affordable payments for the devices over a select timeframe.  

It keeps them up to date with the latest technology. Leases typically follow the grade range (for example, “junior high” in some regions is grades 7-9). At the end of the lease, schools can work with their leasing partner/IT reseller for the next upgrade.  
 
It increases the amount of technology they can get without breaking the bank. Schools in the US get an annual budget. Let’s say a school has a $100K annual tech budget. In this example, the school’s $100K tech budget might not be enough to buy what they need. So, they can lease the tech and base the payments on the anticipated budget dollars they'll receive over the next three or four years. In essence, they can get three to four times the tech spend today by using future budget dollars to make their lease payments.  
 
Fun fact: schools in the US often opt for one annual payment instead of monthly payments. Annual payments are often easier to administer and there’s no benefit to holding onto the cash by paying monthly.  

Featured Region: The United States

Meet the Expert: Rob McIntire, State Local Education Financial Solutions Manager  

A significant percentage of Rob’s State and Local Government (SLG) customers are K-12 public schools and universities.  Rob is one of our many experts when it comes to helping schools with tech leasing solutions.
 

Pop quiz 

Question: Is the school year the same as a school’s fiscal year?  

Answer: No. Depending on the school, the US school year typically runs from late August until early June. The school’s fiscal year starts at the beginning of July.  

What does tech leasing to schools in the US look like?  

To start, we need to explain how public schools in the US can qualify for lower interest rates through tax-exempt financing. 

Tax-exempt financing is available to qualifying state and local government entities — for the ones who qualify, it means they have “SLG” status. When it comes to public schools, the SLG status means they can get assets deemed “essential” (such as student laptops) at lower interest rates than commercial loans. This is possible because tech leasing providers who offer a “tax-exempt” product do not get taxed on the interest they earn on those transactions — this means they can pass the savings on to the customer. It’s a win-win for everyone.  

Additionally, SLG status means public schools can manage their debt restrictions. With lease purchase agreements that are subject to annual appropriation, the lease isn’t considered debt and the school owns the technology at the end of the term.  

“If the school doesn’t appropriate funds for the technology during their annual budgeting process, they must return the technology to the leasing partner,” explains Rob. “This return is done without penalty and means the school hasn't created a long-term debt obligation.”  

What’s an example of school-based tech leasing problem that you’ve solved?  

Rob explains that overall, his goal is to help IT resellers get the best tech leasing solutions for their education customers.  

“Our goal is to simplify the process, especially when it comes to navigating the various state specific and Internal Revenue Service (IRS) guidelines associated with school lease purchase contracts,” explains Rob. “We want to do all of this while providing the lowest financing cost possible. It’s about making things simple and efficient for everyone involved.”. 

Is there anything IT resellers should consider when they're approaching schools in the US?  

Rob explained that during the height of the COVID pandemic, many schools in the US got COVID relief funding to purchase IT. In many cases, schools still have these funds on hand — the rules have changed as far as when and what these funds must be spent on.  

“What I'd say to IT resellers is they should advise schools to review the rules associated with these relief funds and, if possible, hold these funds and use other third-party party funding options for technology,” he says. “These funds can be used on other, non-technology needs, or as a ‘rainy day’ fund for unforeseen needs and use non-debt funding — like lease purchase agreements — to get the essential technology assets they need.”

What should IT resellers look for when it comes to a tech leasing partner for their educational customers? 

Rob summarized a few key points. Ideally, the tech leasing partner should:  

1. Be schooled in state regulations. Noted earlier, state regulations get complicated and vary by state. A partner should understand these regulations.  
2. Score an “A+” when it comes to their solutions. That means going beyond just the hardware and offering software financing. “Leasing partners need to focus on total solutions. Schools need more than just hardware — they also need antivirus protection, educational software, you name it,” says Rob.  
3. Offer top-notch (“gold star”) service. The goal is to make the tech leasing process easy. “As a tech leasing partner, we’re managing multiple relationships — between the IT reseller, manufacturer, and the school representative,” he says. “We need to make sure we’re providing the best experience."  

Class Dismissed!

If you have questions, “raise your hand” by contacting our technology experts. We’re here to help!

Need to Catch Up?

Missed reading part one? Here’s where you’ll find it:  Breaking Tech Budget Barriers for Schools: Part One  

Our last regional spotlight in our “breaking tech budget barriers” series will be on Australia and New Zealand — stay tuned!