In 2020-2021, the District will pay $8.97 million in principal and interest payments and is budgeting the receipt of $202,160 in subsidy income direct from the federal government on federally subsidized debt as described below.  Series 2009C are Taxable Build America Bonds – Direct Pay with a 35 percent interest rate subsidy.  Series 2010A are Qualified School Construction Bonds with a 96 percent interest rate subsidy. General Obligation Bonds Outstanding Issue Date Maturity Date Rate of Interest Original Issue Amount Balance as of June 30, 2019 10/14/09 03/01/24 1.37% $9,185,000 $9,185,000 11/03/09 03/01/21 0.80%-4.75% 10,720,000 3,195,000 09/08/10 03/01/27 4.70% 3,987,000 3,987,000 09/28/10 03/01/30 4.70%-5.0% 16,205,000 16,205,000 09/28/10 03/01/28 3.90%-4.70% 16,270,000 16,270,000 12/27/17 3/1/29 4.00%-5.00% 23,465,000 20,210,000 $69,052,000 35 On November 13, 2019, the Board of Education approved a resolution authorizing and directing the issuance, sale and delivery of $31,075,000 general obligation refunding bonds, Series 2019. The issues refunded were 2010B and 2010C, both Taxable General Obligation Build America Bonds – Direct Pay. The new series has a maturity date of September 1, 2029 and an average coupon of 2.73 percent. The refunding resulted in a net present value savings of $2.3 million. Article VI, Section 26(b), of the Constitution of Missouri, limits the outstanding amount of authorized General Obligation Bonds of the District to 15 percent of the assessed valuation of a district. The approximate assessed value of taxable properties within the District boundaries is $1.309 billion. This results in the District’s constitutional debt limit being approximately $196 million. After deducting the amount of outstanding debt and adding back the cash available in the Debt Service Fund, this results in a $138 million legal debt margin. Fund Balance The fiscal year, as determined by Board Policy DBB, is inconsistent with the school year. Both are inconsistent with the tax year. Fiscal Year: July through June School Year: August through June Tax Year: January through December Legal Debt Margin $80,666,787 47% General Obligation Bonds Outstanding less Cash Available in Debt Service Fund $89,769,270 53% Legal Debt Margin 36

Both are inconsistent with the tax year. Fiscal Year: July through June School Year: August through June Tax Year: January through December Legal Debt Margin $80,666,787 47% General Obligation Bonds Outstanding less Cash Available in Debt Service Fund $89,769,270 53% Legal Debt Margin 36 Essentially, the District receives one large paycheck per year. Although tax revenues in smaller amounts are received by the District throughout the year, the bulk of the revenue arrives in late December and early January. These revenues are generated by local property taxes, which are collected in the fall and distributed to school districts by the County Collector. The Board of Education must set aside money to pay District bills for the balance of the fiscal year (January-June) and for the first six months of the next fiscal year (July-December). As a budget for the following year is being created in the winter months, the Board must work with the actual amount of tax revenue received in January and estimate the amount that will be collected some 11-12 months later. The Board must, therefore, project its expenses far into the future. For example, when an official tax levy is established in September of one year, the taxes are not actually received by the District for six months, but must support the District until taxes are distributed again some 18 months later! Put graphically, here are the ABC’s of school taxes: A B C D July 2020 December 2020 January 2021 January 2021-December 2021 Begin Fiscal Year September 2020 tax levy set Taxes collected by County Collector District receives local taxes (79% of total income) District operates on taxes collected and fund balances 18 Months -----------------------------------------------------------------------------------------------------------→ If tax receipts in January are lower than estimated, it will be more difficult for the District to pay all of its operating expenses for the next 12 months. If new families move into Clayton over the summer months and additional children appear at school in September, additional faculty may have to be hired. If unexpected building repairs are needed, scheduled maintenance may have to be delayed. In setting a tax levy that will provide the money to support the budget, the District takes several steps. • First, financial planning is of prime importance. Annual costs for teachers’ salaries, building operations, and instructional materials are carefully analyzed. The District’s Chief Financial Officer carefully monitors projected increases in assessed valuation, the rate of tax collection, and political actions that may have an impact upon the District’s financial future. • Second, in building the budget, the Board sets aside contingency monies in each of the three operational funds: Special Revenue, General, and Capital Projects. (As stated earlier, the Debt Service Fund is predictable.) For example, the District could experience unpredicted increases in enrollment that would make it necessary to hire additional teaching staff and purchase additional instructional supplies. Contingency money could be used to meet these unanticipated expenditures. • Third, fund balances—money from each fund not spent during a budget year—is placed in a reserve fund. The Board may draw upon this fund—just as a citizen will draw upon a savings account—if the need arises. Because this revenue has been collected through a voter-approved tax levy or represents other revenue, such as interest income derived from invested tax revenue, no additional vote of the people need be taken in order to use it. 37

The Board may draw upon this fund—just as a citizen will draw upon a savings account—if the need arises. Because this revenue has been collected through a voter-approved tax levy or represents other revenue, such as interest income derived from invested tax revenue, no additional vote of the people need be taken in order to use it. 37 For Clayton, fund balances serve another important purpose. Since the District receives most of its tax revenue in late December and early January, but the fiscal year ends June 30, money must be set aside in the reserve fund to meet District expenses—such as payroll—from July through December. Experience has shown that a minimum fund balance of 18 percent of the expenditure budget must be maintained to prevent the necessity of borrowing money to meet District expenses during the fall months. Proposition E was placed on the ballot because the District was prudently spending down operating reserves over several years. During this time, the District made reductions in expenditures with the goal of continuing to align District resources with our priorities but also protect what matters most: our instructional core. While administration reduced expenditures and made permanent changes to staffing and programs, it was done in a way that protected the instructional core and prioritized organizational and operational impacts in order to minimize the direct impact on students and their learning. Due to the successful passing of Proposition E, the District projects approximately a $2.8 million operating surplus and growing the fund balance to approximately 40 percent, which exceeds the 18 percent fund balance goal. Historical revenues, expenses and fund balance from the last tax levy (2003) and projected for the next five years are presented below. 38

Due to the successful passing of Proposition E, the District projects approximately a $2.8 million operating surplus and growing the fund balance to approximately 40 percent, which exceeds the 18 percent fund balance goal. Historical revenues, expenses and fund balance from the last tax levy (2003) and projected for the next five years are presented below. 38 Reporting Every district within the state of Missouri is required to file a yearly financial summary report with DESE by August 15 of each year entitled the Annual Secretary of the Board Report (ASBR). The District submits this report for all governmental funds on the cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles (GAAP). The cash basis is used to enable the District to more accurately compare itself to other districts since the majority of the districts within the state of Missouri report on the cash basis of accounting. In accordance with RSMo 165.121 and Board Policy DIE, every district within the state of Missouri is required to file audited financial statements with DESE by December 31 of each year. The auditor’s management letter and a copy of the Board minutes indicating approval of the audit report must also be submitted to DESE. The District’s audited financial statements are prepared and audited in accordance with GAAP. 39 FINANCIAL SECTION 40 Actual Revenues, Expenditures and Balances 2018-2019 41

Actual Revenues, Expenditures and Balances 2018-2019 41 Special Capital Subtotal Debt Subtotal General Revenue Projects Operating Service District Business-Type Grand Fund Fund Fund Funds Fund Funds Activities Total Tax Rate 1.0550 $2.0770 $0.1100 $3.2420 $0.6230 $3.8650 $3.8650 Balance 7/01/18 $5,504,579 $10,401,569 $5,764,463 $21,670,611 $24,462,860 $46,133,471 - $46,133,471 Local Tax Revenues Delinquent Tax Collections ($149,152) ($293,508) ($15,546) ($458,206) ($88,038) ($546,244) ($546,244) Current Tax Collections $11,753,867 $23,129,784 $1,225,105 $36,108,756 $6,937,816 $43,046,572 $43,046,572 $11,604,715 $22,836,276 $1,209,559 $35,650,550 $6,849,778 $42,500,328 - $42,500,328 Other Sources $6,244,802 $6,335,764 $584,425 $13,164,991 $1,748,392 $14,913,383 $1,081,923 $15,995,306 Total Revenues $17,849,517 $29,172,040 $1,793,984 $48,815,541 $8,598,170 $57,413,711 $1,081,923 $58,495,634 Expenditures $18,615,450 $32,191,554 $2,098,468 $52,905,472 $8,801,874 $61,707,346 $881,105 $62,588,451 Excess (Deficit) Revenues Over Expenditures ($765,933) ($3,019,514) ($304,484) ($4,089,931) ($203,704) ($4,293,635) $200,818 ($4,092,817) Other Financing Sources (Uses) General Obligation Bond Expenditures ($19,280,000) ($19,280,000) ($19,280,000) Transfers In $236,487 $236,487 $236,487 $236,487 Transfers Out ($33,156) ($2,513) ($35,669) ($35,669) ($200,818) ($236,487) Excess (Deficit) Revenues and Other Financing Sources over Expenditures and Other Financing (Uses) ($529,446) ($3,052,670) ($306,997) ($3,889,113) ($19,483,704) ($23,372,817) - ($23,372,817) Actual Balance 6/30/19 $4,975,133 $7,348,899 $5,457,466 $17,781,498 $4,979,156 $22,760,654 - $22,760,654 SCHOOL DISTRICT OF CLAYTON ACTUAL REVENUES, EXPENDITURES AND BALANCES TO JUNE 30, 2019 42 Estimated Revenues, Expenditures and Balances 2019-2020 43