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. 27 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 2019-2020 Original Budget 2020-2021 Proposed Expenses Variance General $20,937,820 $21,444,620 $506,800 Special Revenue $33,679,700 $34,508,460 $828,760 Capital Projects $2,154,820 $2,313,230 $158,410 Debt Service $7,829,650 $8,977,790 $1,148,140 Total $64,601,990 $67,244,100 $2,642,110 The increase in General and Special Revenue funds is due to salary (1 percent budgetary impact for certified and 2 percent for classified) and benefit (9 percent) increases (see Salary and Benefit section), as well as additional staffing at the High School to accommodate a large freshman class. The increase in Capital Projects funds is due to the successful passing of Proposition E, which allows for an additional $150,000 toward capital projects (see Capital Expenditures section). The increase in Debt Service fund is due to debt refinancing (see Debt Service section). 28

The increase in Capital Projects funds is due to the successful passing of Proposition E, which allows for an additional $150,000 toward capital projects (see Capital Expenditures section). The increase in Debt Service fund is due to debt refinancing (see Debt Service section). 28 2019-2020 2020-2021 Variance Variance Budget Proposed Exp $ % Certified Salaries $26,379,910 $26,856,650 $476,740 1.81% Classified Salaries $7,849,640 $8,032,860 $183,220 2.33% Board Paid Health Benefits $4,169,190 $4,511,740 $342,550 8.22% Employee Benefits $5,928,880 $6,091,270 $162,390 2.74% Purchased Services $4,932,800 $5,359,620 $426,820 8.65% Supplies $4,352,180 $4,110,250 ($241,930) -5.56% Equipment/Capital $2,153,320 $2,313,230 $159,910 6.91% Total Operating $55,765,920 $57,275,620 $1,509,700 2.64% Explanations of the fluctuations in the various categories are described in more detail on the following pages. 29

2019-2020 2020-2021 Variance Variance Budget Proposed Exp $ % Certified Salaries $26,379,910 $26,856,650 $476,740 1.81% Classified Salaries $7,849,640 $8,032,860 $183,220 2.33% Board Paid Health Benefits $4,169,190 $4,511,740 $342,550 8.22% Employee Benefits $5,928,880 $6,091,270 $162,390 2.74% Purchased Services $4,932,800 $5,359,620 $426,820 8.65% Supplies $4,352,180 $4,110,250 ($241,930) -5.56% Equipment/Capital $2,153,320 $2,313,230 $159,910 6.91% Total Operating $55,765,920 $57,275,620 $1,509,700 2.64% Explanations of the fluctuations in the various categories are described in more detail on the following pages. 29 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 17.5 years of experience with 94.6 percent holding a Master’s Degree or higher. The Missouri average for that year was 12.5 years of experience with 58.9 percent holding Masters Degrees or higher. 2019-2020 was the first year of a two-year salary agreement. For the 2020-2021 budget, a 1.1 percent overall budget impact has been included in the current projections as per the salary agreement. The average salary increase for a teacher is 2.41 percent due to staff turnover. Administrative salaries, part-time temporary employment and substitute budgets were all increased at 2 percent. 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 percent 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 exceeded premiums by almost 30 percent. As a result, the District elected to move to a self-funded medical insurance plan to minimize the rate increase for 2018 to 16 percent. 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 9 percent increase is reasonable for the preliminary 2020-2021 budget projections. 30

Claims data will be monitored closely. Based on market and historical data, a 9 percent increase is reasonable for the preliminary 2020-2021 budget projections. 30 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 2019-2020 which is 14.50 percent of retirement compensation. Retirement contributions for PEERS members and employer matching have also been approved by the retirement system at the same percentage as 2019-2020 which is 6.86 percent of retirement compensation. Retirement compensation includes salary, extra pay, and medical, dental, and vision insurance contributions. PSRS participants are not eligible for social security benefits and neither the District nor the participants contribute to social security on their behalf. PEERS participants and the District both contribute to social security and participants are eligible for full benefits. School Building and Department Budgets For 2020-2021, 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. This overall budget area is budgeted with a 2 percent increase. 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 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: 31

As a result, many projects get deferred over a period of years. Some of these projects include: 31  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. Due to the successful passing of Proposition E, proposed maintenance Capital Improvement Plan (CIP) expenditures for 2020-2021 will have an additional $200,000 in funding for a total allocation of $922,790. An additional $595,000 of funding from Proposition E will also be used to pay the annual financing payments for improvements at the Center of Clayton. A contingency fund of $50,000 will been maintained to deal with unanticipated maintenance needs and emergency repairs. 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. In addition, funding for deferred capital requests listed above will be discussed during the 2020-2021 school year. The proceeds from the sale of the Maryland building could be used to fund deferred capital request. 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. Capital requests in excess of this funding source could be financed over a period of 10 years. 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 percent inflationary increase over the next two years. Due to a delay in presenting an update on the TIP during the 2019-2020 school year, a 2 percent inflationary increase will be applied to provide a funding level of $636,240. The Board will receive an update on the approved TIP during 2020-2021. Further, a $10,000 contingency is recommended to handle unanticipated needs. 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 District and 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 $200,000 by each parent organization (the City of Clayton and the District). The Center is projecting parent contributions for FY 2020 to remain at $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 anticipated for the end of the fiscal year. The District will 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 when more information becomes available. 32