2018-2019 Revised 2019-2020 Proposed Variance Variance Budget Revenue $ % Property Taxes $33,011,830 $46,468,680 $13,456,850 40.76% Tuition – Personal $489,500 $464,850 ($24,650) -5.04% Tuition – Other Districts $320,000 $165,620 ($154,380) -48.24% VICC $1,495,570 $1,386,920 ($108,650) -7.26% County $370,700 $382,000 $11,300 3.05% State $1,634,050 $1,634,050 $0 0.00% Federal $468,210 $462,210 ($6,000) -0.01% Other $7,681,270 $7,680,680 ($590) -0.01% Total Operating $45,471,130 $58,645,010 $13,173,880 28.97% As previously stated, the primary change in operating revenue is due to additional property taxes due to the successful passing of Proposition E. Reduction of Other is primarily due to the loss of Financial Institution Taxes. 24 Expenditures by Function The expenditure function code describes the action, purpose, or program for which activities are performed. DESE requires the District to report by functions based on five main categories: Instruction, Support Services, Community Services, Facilities Acquisition and Construction, and Debt. These functions are further classified into sub-functions based on schools, programs, services, and areas of responsibilities. 1000-1999 Instruction – Activities dealing directly with the teaching of pupils, or the interaction between teachers and pupils. Teaching may be provided for pupils in a school classroom, in another location such as a home or hospital, or in another learning situation. Activities of aides or assistants are included in this function when they assist in the instructional process. 2000-2999 Support Services – Services that provide administrative, guidance, health, and logistical support to facilitate and enhance instruction. Supporting services exist as adjuncts for the fulfillment of the objectives of instruction. 3000-3999 Community Services – Activities that do not directly relate to providing education of pupils in the District. These include services provided by the District for the whole or segments of the community. 4000-4999 Facilities Acquisition and Construction Services – Activities concerned with the acquisition of land and buildings, remodeling buildings, the construction of buildings, additions to buildings, the initial installation of service systems, the extension of service systems, and any other project meant to improve a site. 5000-5999 Short and Long-Term Debt – Activities servicing the debt of the District. Expenditures by Object The expenditure object code identifies the service or commodity obtained. The major expenditure object categories are: 6100-6199 Salaries – Amounts paid to employees of the District who are considered to be in a position of permanent or temporary employment, including personnel substituting for those in permanent positions. This includes gross salary for services rendered while on the payroll of the District. 6200-6200 Benefits – Amounts paid by the District for benefits on behalf of the employee. These amounts are not included in the gross salary. Such expenditures include fringe benefits. While these payments are not paid directly to the employee, they are considered part of the cost of employment. 6300-6399 Purchased Services – Amounts paid for services rendered by personnel who are not on the payroll of the District and for other services which the District may purchase. While a product may or may not result from the transaction, the primary reason for the purchase is the service provided. 6400-6499 Supplies – Amounts paid for material items of an expendable nature that are consumed, deteriorate in use, or lose separate identity through fabrication or incorporation into different or more complex units or substances. 25

While these payments are not paid directly to the employee, they are considered part of the cost of employment. 6300-6399 Purchased Services – Amounts paid for services rendered by personnel who are not on the payroll of the District and for other services which the District may purchase. While a product may or may not result from the transaction, the primary reason for the purchase is the service provided. 6400-6499 Supplies – Amounts paid for material items of an expendable nature that are consumed, deteriorate in use, or lose separate identity through fabrication or incorporation into different or more complex units or substances. 25 6500-6599 Capital Outlay – Expenditures for the acquisition of fixed assets or additions to fixed assets. Examples include expenditures for land or existing buildings, improvements of grounds, construction of buildings, additions to buildings, remodeling of buildings, and equipment. 6600-6699 Short and Long-Term Debt – Expenditures for the retirement of debt, the payment of interest on debt, and the payment fees. Fund 2018-2019 Original Budget 2019-2020 Proposed Expenses Variance General $20,362,750 $20,937,820 $575,070 Special Revenue $33,092,460 $33,679,700 $587,240 Capital Projects $1,517,880 $2,154,820 $636,940 Debt Service $8,804,540 $7,829,650 ($974,890) Total $63,777,630 $64,601,990 $824,360 The increase in General and Special Revenue funds is due to salary (one percent for certified and two percent for classified) and benefit (10 percent) increases, as well as minimal increases in utilities and liability insurance. The increase in Capital Projects funds is due to the successful passing of Proposition E which allows for an additional $100,000 toward capital projects and $575,000 toward the payment of the debt on the improvements to the Center of Clayton (see Capital Expenditures section). 26

Fund 2018-2019 Original Budget 2019-2020 Proposed Expenses Variance General $20,362,750 $20,937,820 $575,070 Special Revenue $33,092,460 $33,679,700 $587,240 Capital Projects $1,517,880 $2,154,820 $636,940 Debt Service $8,804,540 $7,829,650 ($974,890) Total $63,777,630 $64,601,990 $824,360 The increase in General and Special Revenue funds is due to salary (one percent for certified and two percent for classified) and benefit (10 percent) increases, as well as minimal increases in utilities and liability insurance. The increase in Capital Projects funds is due to the successful passing of Proposition E which allows for an additional $100,000 toward capital projects and $575,000 toward the payment of the debt on the improvements to the Center of Clayton (see Capital Expenditures section). 26 2018-2019 2019-2020 Variance Variance Budget Proposed Exp $ % Certified Salaries $25,886,150 $26,379,910 $493,760 1.91% Classified Salaries $7,683,300 $7,849,640 $166,340 2.16% Board Paid Health Benefits $4,055,000 $4,169,190 $114,190 2.82% Employee Benefits $5,623,320 $5,928,880 $305,560 5.43% Purchased Services $4,653,840 $4,932,800 $278,960 5.99% Supplies $4,557,260 $4,352,180 ($205,080) -4.50% Equipment/Capital $1,515,080 $2,153,320 $638,240 42.13% Total Operating $53,973,950 $55,765,920 $1,791,970 3.32% Explanations of the fluctuations in the various categories are described in more detail on the following pages. 27

2018-2019 2019-2020 Variance Variance Budget Proposed Exp $ % Certified Salaries $25,886,150 $26,379,910 $493,760 1.91% Classified Salaries $7,683,300 $7,849,640 $166,340 2.16% Board Paid Health Benefits $4,055,000 $4,169,190 $114,190 2.82% Employee Benefits $5,623,320 $5,928,880 $305,560 5.43% Purchased Services $4,653,840 $4,932,800 $278,960 5.99% Supplies $4,557,260 $4,352,180 ($205,080) -4.50% Equipment/Capital $1,515,080 $2,153,320 $638,240 42.13% Total Operating $53,973,950 $55,765,920 $1,791,970 3.32% Explanations of the fluctuations in the various categories are described in more detail on the following pages. 27 Staffing The vision for staffing in the School District of Clayton as framed by the District’s mission, vision and core values is to have the best teacher possible in every classroom and the best staff member possible in every non-teaching position. With this purpose in mind, elements critical to staffing recommendations for budget development include: • Enrollment • Class Size Policy • District’s Curricular and Program Expectations • Missouri School Improvement Program Standards • Fund Balance Guidelines Administrators discuss staffing on an ongoing basis and make recommendations that keep the district within fund balance goals. Staffing may be adjusted at any time between the presentation of the budget and the start of the school year based upon a periodic review of the enrollment/registration process or program enrollments at the secondary level. The staffing contingency budget may be used when actual enrollment exceeds projected enrollment. Before a recommendation to replace current staffing or a recommendation for contingency staffing, administrators will make every effort to accommodate any unforeseen need with existing resources. An annual contingency account equivalent to one teacher at the average teacher compensation is maintained to offset fluctuations due to differences between projected enrollment and actual enrollment. Salary and Benefits Certified Staff – The District is very fortunate to have the most experienced and highly educated teaching staff in the area. During 2018-2019, our average teacher had 17.0 years of experience with 95.5% holding a Master’s Degree or higher. The Missouri average for that year was 12.3 years of experience with 58.4% holding Masters Degrees or higher. 2018-2019 was the final year of a two-year salary agreement. Administration and teacher representatives began having salary discussions in March 2019. The Board approved a two-year salary schedule at their May 8, 2019 meeting. A 1.0% budgetary increase for certified teaching staff has been included in the current projections. The average salary increase for a teacher is 2.45% due to staff turnover. Administrative salaries, part-time temporary employment and substitute budgets were all increased at 2%. Administration is currently reviewing certified staffing needs for the 2019-2020 school year. Non-Certified Staff – Non-certified staff include the following categories of support staff: nurses, office personnel, maintenance personnel, before and after school personnel, personnel at the Family Center, and miscellaneous part-time non-teaching positions. A 2% budgetary increase for non-certified staff has been included in the current budget and projections. Employee Benefits – Employee benefits include medical, dental, vision, long-term disability, and life insurance. Also included in this category is the Employee Assistance Program. The employee benefit plans are administered on a calendar year basis. During 2017 the District experienced significant medical claims that exceed premiums by almost 30%. As a result, the District elected to move to a self-funded medical insurance plan to minimize the rate increase for 2018 to 16%. Because of the trend in industry premiums for the past two years, the increase received through the negotiation process and fees that continue to be passed along due to Health Care Reform, it is reasonable to continue to anticipate a sizeable increase for future years. Claims data will be monitored closely. Based on market and historical data, a 10% increase is reasonable for the preliminary 2019-2020 budget projections. 28

Claims data will be monitored closely. Based on market and historical data, a 10% increase is reasonable for the preliminary 2019-2020 budget projections. 28 Administration will continue to work with a representative group of staff to identify ways to adjust the plan design, negotiate discounts, and incorporate wellness activities such as free membership and low-cost fitness classes for staff through the Center of Clayton that will maintain a competitive benefits package. Retirement Contributions - Retirement contributions for PSRS members and employer matching have been approved by the retirement system at the same percentage as 2018-19 which is 14.50% of retirement compensation. Retirement contributions for PEERS members and employer matching have also been approved by the retirement system at the same percentage as 2018-19 which is 6.86% of retirement compensation. Retirement compensation includes salary, extra pay, and medical, dental, and vision insurance contributions. Neither PSRS participants nor the District contributes to social security and participants are not eligible for social security benefits based on employment with the District. PEERS participants and the District both contribute to social security and participants are eligible for full benefits. School Building and Department Budgets For 2019-2020, school building and department budgets will be established through the ZBB approach as previously described. This represents approximately $5.0 million of the overall operating budget. All members of the District Leadership Council will share in the experience of analyzing budget trade-offs and making tough decisions between building and department requested wants and enhancements. It is recommended not to increase this operating budget to be fiscally prudent. However, through the ZBB approach, District leaders will ensure the District’s resources are allocated to programs that support its mission, vision and core values as well as to secure the District’s ability to continue to provide our students with a rich and rigorous educational experience. Capital Expenditures The District defines capital expenditures and projects as follows: • Capital Expenditures – Any purchase of furniture, equipment, vehicles, or permanent improvement having per unit cost of $1,000 or more and useful life of more than one year is classified as a capital asset. Purchases of $3,500 or more will be competitively bid, and sealed bids will be required for purchases that may exceed $15,000 as stated in District Policy DJF -2 – Purchasing. • Capital Project – An activity that does not occur routinely or annually, has a scheduled and definitive beginning and ending, and results in a capital improvement or acquisition. Funding for this activity is from local revenue sources. • Capital Projects Bond Program – Major technology infrastructure and facility needs such as new construction, or upgrading existing facilities are funded through the sale or refunding of bonds. As part of a bond elections process, the District develops a framework of the projects to be addressed. These projects are determined through internal staff analysis and input from the community. Once the projects are identified, specific project budgets are established on a project basis. Facility Services – The Director of Facility Services and key stakeholders work to develop a five-year capital projects budget each January and February. General building maintenance needs are considered as well as educational needs. The needs throughout the District are analyzed and prioritized. This list is continuously updated as the needs of the District and its students change. Each spring the District asks the Board to approve the top priority projects that fit within budget parameters that need to be completed at that time. As a result, many projects get deferred over a period of years. Some of these projects include: 29