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

As a result, many projects get deferred over a period of years. Some of these projects include: 29  Safety and security improvements at every school.  Infrastructure improvements that were identified in the District’s Facilities Master Plan but were not pressing enough to be included as part of the 2009 bond issue.  Updates to learning spaces/libraries to meet the evolving needs of today’s learners.  Improvements to The Center of Clayton which serves Clayton High School’s physical education and athletic programs. Due to the successful passing of Proposition E, an additional $675,000 a year in funding for facility and maintenance needs will be budgeted. Total proposed maintenance Capital Improvement Plan (CIP) expenditures for 2019-2020 will include funding at the same level as 2018-2019 of $625,280 with an additional $100,000 from Proposition E for a total allocation of $725,280. The remaining $575,000 of the additional $675,000 from Proposition E will be used to pay the annual financing payments for improvements at the Center of Clayton. A contingency fund of $50,000 has historically been maintained to deal with unanticipated maintenance needs and emergency repairs. In addition, requests to expend funds from the sale of the Maryland Building will be presented during the 2019-2020 school year. These funds are not part of operating funds and are not reflected in the operating budget. The Board has committed these funds for capital projects and must approve each expenditure from these funds. The first request will be to hire an architect to perform a safety audit of our buildings. Facility staff are currently prioritizing other maintenance projects to bring forward for approval. Many Facility Service projects are completed during the summer months and therefore projects that are not completed prior to the end of the fiscal year will continue to be carried over into the following year’s budget. Technology – The District finalized its “technology toolbox” and recommendations were approved by the Board on January 25, 2017. The recommendations include additional support for technology beyond previous allocations. As a result, the Technology Improvement Plan (TIP) was increased from $500,000 to $600,000 in 2017-2018 with a 2% inflationary increase over the next 2 years. As a result, TIP funds will be budgeted at $624,240 for 2019-2020. Further, an additional $50,000 contingency was established to handle unanticipated needs. The Board will receive an update on the approved TIP during 2019-2020. The primary purpose of TIP funds is to maintain a replacement cycle for computers, tablets, Chromebooks and servers. Because many of Technology’s projects are completed during the summer months, projects that are not completed prior to the end of the fiscal year will continue to be carried into the next fiscal year. Clayton Recreation Sports and Wellness Commission The Clayton Recreation, Sports and Wellness Commission, Inc. (CRSWC) is a not-for-profit organization, which provides a shared use facility called the Center of Clayton (Center) to address the athletic and educational needs of the community. The goal of the Center is to cover operating costs; however, feasibility studies conducted prior to the opening of the Center recommended establishing a funding mechanism for capital and equipment replacement costs. These expenditures had not been factored into the original projections and unexpected capital costs would be difficult if not impossible for the Center’s budget to fund. Historically, expenditures in the capital and equipment replacement fund have been provided through a total annual capital contribution of $100,000 to $150,000 by each parent organization (the City of Clayton and the District). The Center is projecting parent contributions for FY 2019 to increase from $150,000 to $200,000 for each entity of which would be primarily for capital and equipment replacement. The Center consistently reviews staffing and revenue projections to minimize operational losses. Although, if the Center experiences an operating loss, additional financial support from each parent organization would be necessary. Based on preliminary projections prepared by the Center’s staff, an operating loss is 30

Although, if the Center experiences an operating loss, additional financial support from each parent organization would be necessary. Based on preliminary projections prepared by the Center’s staff, an operating loss is 30 anticipated for the end of the fiscal year. The District would be required to fund half of this loss. Projections include funding to the CRSWC only at the $200,000 level. Adjustments to the budget will be made if more information becomes available. It is also recommended that the Board continue to commit to placing in reserve $100,000 a year to cover the costs of potential major capital repairs to the building and grounds. This reserve would accumulate up to, and be maintained at, a $500,000 fund balance. 2018-2019 represents the fifth year totaling the recommended $500,000 in reserves. The funds are recorded as committed on the balance sheet for the governmental fund financial statements as well as not included in fund balance projections. The Center finalized a facility needs assessment and presented it to the CRSWC board for approval on February 17, 2017. The project was put out to bid in March 2019 and construction is expected to begin June 2019. The overall project will:  Preserve the aging facility and protect our investment.  Enhance the facility to maintain/increase membership and continue to cover operational costs.  Improve energy conservation/sustainability.  Request from the City to replace the mulch pile with a new parking lot (the City donated the property to the CRSWC).  Stay within a $10.6 million total budget. The Board approved the issuance of Certificates of Participation (COPs) to fund the $5.0 million District portion of the capital improvements to the building and also approved the release of $300,000 of the District reserves committed for capital improvements at the Center for the District’s portion of the expansion of the parking lot. The estimated $575,000 annual COPs payment is included in the projections. Finally, on January 9, 2019, the Board authorized the solicitation of bids for the new Power Lifting Room that will have exclusive use by the District. District staff are finalizing the results of that bid and will present to the Board for approval when finalized. It is recommended that committed funds be used to fund this expenditure. After both of these projects are completed, the reserve is estimated to have $120,000 remaining and will be replenished at an amount up to $100,000 annually until accumulated up to $500,000. Family Center The Family Center budget has historically been developed through a ZBB approach. Funding is allocated based on operational needs. District administration will continue to review the Family Center’s fee structure to ensure tuition maintains competitiveness with market programs and covers the historical percentage of operating costs. Historic funding levels and District support are provided in the following chart and gap analysis: 2013- 2014 2014- 2015 2015- 2016 2016- 2017 2017- 2018 2018- 2019* 2019- 2020* Program Revenues $711,489 $795,967 $769,746 $743,045 $813,688 $825,000 $835,000 Operational Costs $381,421 $458,376 $399,302 $406,795 $441,623 $491,760 $559,690 Program Costs $662,088 $725,237 $744,649 $762,832 $799,383 $836,020 $878,930 Total Expenses $1,043,509 $1,183,613 $1,143,951 $1,169,627 $1,241,006 $1,327,780 $1,438,620 District Support $ $332,020 $387,646 $374,205 $426,582 $427,318 $502,780 $603,620 District Support % 31.82% 32.75% 32.71% 36.47% 34.43% 37.87% 41.96% Program Generated 68.18% 67.25% 67.29% 63.53% 65.57% 62.13% 58.04% 31