Financing ICT in Schools

Operating Leases

Published: 18 February 2013

A school's desire to provide a ubiquitous computing model has always been tempered by traditional financial practices across the education sector. When put alongside tightening school budgets, many school leaders have been unable to consider the outright purchase of essential ICT equipment. However, gradual relaxations in the rules governing school finances have enabled school leaders to consider alternative methods for procuring ICT equipment.

In the UK, local authority funded schools and academies that are funded directly via the Education Funding Agency are permitted to take up operating leases to help finance their ICT strategies. The operating lease involves the school paying a rental fee for the hire of the ICT equipment for a period of time, and are similar to rental agreements. The UK's Department for Education states that no other types of lease, such as a finance lease or hire purchase, may be entered in to by a school as this is a form of borrowing.

Features and benefits of an operating lease: [1] [2]

  • ownership remains with the leasing company providing the finance
  • the term is fixed and should not represent the major part of the economic, or useful life, of the asset involved
  • operating leases can be considered as running costs by schools
  • fixed lease payments can improve budgetary planning and your school's ICT costs become more transparent
  • there is a high degree of flexibility for schools. Schools can either upgrade or replace their ICT equipment and leases can be extended to suit the needs of schools
  • improved ICT asset management
  • education benefits can be realised earlier when compared to saving for an outright purchase programme for ICT equipment

An operating lease may not suit every school:

  • you are tied into making payments for the full length of the lease
  • since the company making the lease (the lessor) is taking the risk over the purchase of the ICT equipment they will pass across charges for insurance premiums onto the school, thereby raising the cost of the overall lease
  • there is less freedom to move funds from one school budget to another as the school is committed to making payments on the operating lease
  

There are a number of companies that provide operating leases to the education sector and a selection of these are listed below: [3 - 7]

Schools in the UK can also access operating leases from ICT suppliers on the Department for Education's ICT Services Framework. [8] In addition, the e-Learning Foundation is a valuable source of support for schools who are considering an ICT operating lease. [9]

The growing popularity of 1:1 schemes and the educational benefits that can be derived from ubiquitous computing within the education sector will place increasing pressure on school leaders to design, formulate and manage a long term investment programme for ICT in their schools. Operating leases enable schools to bring forward the benefits that can be accrued from a 1:1 device strategy whilst ensuring affordable ongoing operating costs to schools.

Footnotes:

  1. Department for Education: http://media.education.gov.uk/assets/files/pdf/p/tips%20for%20successful%20leasing.pdf
  2. Academies Financial Handbook: https://www.education.gov.uk/publications/eOrderingDownload/EFA-00110-2012.pdf
  3. CHG-Meridian: http://www.chg-meridian.com/public_sector_clients.htm
  4. Econocom: http://www.econocom.com/our-activities/financing/financing-services
  5. Ergo: http://www.ergo.co.uk/Services/Pages/Leasing.aspx
  6. Investec: http://www.investec.co.uk/products-and-services/finance-and-lending/asset-finance-and-leasing/Equipment-Finance/education-leasing.htm
  7. Stone: http://www.stonegroup.co.uk/cost-saving/leasing.aspx
  8. Department for Education's ICT Services Framework: http://www.education.gov.uk/b0069801/buying/ict/ict-services-framework/ictsuppliers
  9. e-Learning Foundation: http://www.e-learningfoundation.com/finance