Following Sue Thompson's guest post ' Top Ten Tips for Effective Procurement ', we explore tips 7 and 10, and consider how leasing is gaining in popularity as a way of helping schools achieve best value despite limited capital funds.
Earlier this month, the Department for Education signed up the Financing & Leasing Association (FLA) to develop an equipment leasing framework for schools. The move is intended to help schools continue to invest in technology even as capital funding declines. By leasing equipment, rather than buying it, schools can instead pay for their ICT from their revenue budgets. Source: Education Investor
During December 2010, my team met with David Waters, Deputy Head Teacher and Head of ICT at Oldfield School in Bath, and David explained how, when he joined the school, the ICT was tired and out-of-date, with a massive investment required to refresh and replace the kit. As part of the school's drive to modernise teaching and learning, particularly in its approach to embedding ICT, David needed a sustainable approach and that's where the school looked at a leasing service.
By leasing, the school benefits from:
- immediate access to the latest equipment
- greater economies of scale through the volume they purchase
- the rolling programme of investment allows the school to benefit from a 'technology refresh', upgrading equipment quickly and easily by extending the lease term.
With pressures on funding increasing, David tells us that:
We have a budget and we stick to it. A fund we rely on was ring-fenced in the past, and looks like that will go. Any school based funding will now have to come from the capital budget; as that is reducing, we will be even more reliant on leasing
Jo Miller, the school's bursar, recommends that schools who are considering leasing should:
Consider companies that understand education. Schools are unique, and organisations that work with them well recognise that fact. The ability to work around our term times is something fairly small, yet it's something we really appreciate about RM.
We've recently refreshed our leasing services under the "RM Rentals" badge, and one thing Jo appreciates is that the service is "efficient, quick and clear". So I asked Barry Bailie, RM Education's Finance Product Manager, to give an example of the kind of flexibility available to schools by using leasing services:
As schools enter the 2011/2012 funding year, some will have to make radical changes to allow for the reduction in capital funding and, for many, this will be hard and the temptation will be to stop spending. We have a number of tools to try and make this difficult situation easier, such as a 1 year deferral, giving schools a year to get used to the cuts while still being able to replace the kit they need. Then, when they do start paying, as it's on a lease the rentals due will be manageable with their reduced budgets.
Read the full Oldfield School case study (.pdf) or find out more about RM Rentals online.