Te approach is especially beneficial for districts with declining enrollment or that are likely to consolidate with another district in the future, Berg said. Whether a district faces declining enroll- ment or a short-term growth spurt, Cool- baugh said that leases offer an advantage over purchasing. “What leases do upfront is collar your liability,” Coolbaugh said. “If you had $100,000 to spend, you could buy one bus or lease eight. You wouldn’t be building equity, but you are satisfying your need. Are you thinking from a purely financial perspective or trying to solve a shorter-term fleet need? “At the end of the day, you’re getting the same result. It can be a benefit to those who have to work with their balance sheet where they can update equipment without the entanglement of long-term debt,” Coolbaugh said. He said that he believes some banks have become more conservative with their lending practices in recent months because of “multi- pronged compliance issues coming down the

tracks.” Te landmark federal Dodd-Frank legislation has had an impact on contractors’ leases based on their ability to carry them as off balance sheet expenses. Companies were able to account for a lease while writing off the entire cost as an expense to the company, masking true liabilities. As a result, operating leases will be treat- ed as capital leases in the future. “Most operators are unaware of the upcoming changes,” Coolbaugh said. “Te landscape as a whole is going to be a bit more conservative, but there’s still an abun- dance of liquidity in the marketplace for good customers with clean balance sheets.” Coolbaugh said that districts and contractors should remember that the final decision on leasing or financing remains in their hands. “If they want equipment or need equip- ment, that’s when they should borrow, not just because interest rates are low,” he said. “Typically, a good operation with a good balance sheet can call the shots on

how they structure the loan so there is less capital outlay upfront.” Jones, who operates a 79-vehicle fleet,

allayed concerns that a first lease may push a district into a cycle of leasing. “Really, it gives us more flexibility. We won’t have to put the miles onto some of our older buses. We can use (leased) buses for highway miles and keep them off the gravel, as well,” he said. Te Auburn-Washburn district may lease

more large buses—just as it has done with its smaller, special-needs vehicles on a five- year cycle—but Jones expects to continue buying one or two buses in the future to stop the fleet’s aging trend. He also expects more Kansas districts to consider leasing. “It’s not like athletics where we compete with one another. Transportation and oper- ations departments across the state all com- municate, we’re familiar with each other and try to help each other out,” Jones said. ●



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