In the District-wide financial statements, equity is classified as net position and displayed in three components. Net investment in capital assets consists of capital assets including restricted capital assets, net of accumulated depreciation, reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those net assets. Net position is reported as restricted when there are constraints imposed on their use either through enabling legislation adopted by the District, or through external restrictions imposed by creditors, grantors, contributors, or laws or regulations of other governments. The remaining net position that does not meet the definition of restricted or net investment in capital assets is reported as unrestricted. The District first utilizes restricted resources to finance qualifying activities. In the fund financial statements, governmental fund equity is classified as fund balance. Governmental funds report the following classifications of fund balance: Nonspendable – funds that cannot be spent due to their form (e.g., inventories and prepaid expenditures), or funds that legally or contractually must be maintained intact; Restricted – funds that are mandated for a specific purpose by external parties, constitutional provisions, or enabling legislation; - 34 - SCHOOL DISTRICT OF CLAYTON NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Committed – funds that are set aside for a specific purpose by the District’s highest level of decision making authority, the Board. The fund balance policy requires formal resolution to be taken prior to the end of the fiscal year. The same formal action must be taken to remove or change the limitations placed on the funds; Assigned – consists of funds that are set aside with the intent to be used for a specific purpose. Under the District’s adopted policy, amounts may be assigned by the Chief Financial Officer; and, Unassigned – excess funds that have not been classified in the previous categories. All funds in this category are considered spendable resources. This category also provides the resources necessary to meet unexpected expenditures and revenue shortfalls. In other governmental funds, if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes, a negative unassigned fund balance may be reported. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first unless legal requirements disallow it. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds as needed, unless the Board has provided otherwise in its commitment or assignment actions. The details of the fund balances are included in the Balance Sheet - Governmental Funds. Proprietary funds equity is classified the same as in the District-wide financial statements.

Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied annually by November 1 and are due by December 31. In the District-wide financial statements, property tax revenues are recognized in the fiscal year levied. In the fund financial statements, property tax revenues are recognized in the fiscal year levied when they become measurable and available. Available property tax revenue includes those property tax receivables expected to be collected within 60 days of year end. Revenues not collected within 60 days of year end are reported as deferred inflows of resources. - 35 - SCHOOL DISTRICT OF CLAYTON NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Sales tax is collected by the State of Missouri and remitted to districts within the state based on eligible pupils. The State receives the sales tax approximately one month after collection by vendors. Sales taxes collected by the State in June and July, which represent sales for May and June, and received by the District in July and August have been accrued and reported as sales tax receivable. Entitlements and grants are recognized as revenue in the fiscal year in which all eligibility requirements have been satisfied. Grants and entitlements received before eligibility requirements are met are reported as unearned revenue. In the fund financial statements, entitlement and grant revenues not collected within 60 days of year end are reported as deferred inflows of resources. Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, and investing activities.

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the District provides healthcare benefits to eligible former employees and eligible dependents that elect to participate. Certain requirements are outlined by the federal government for this coverage. The premium is paid in full by the insured on or before the 15th day of the month for the actual month covered. This program is offered for a duration of eighteen months after the termination date. The District enrolls electing, eligible participants with a third-party COBRA administrator. Participants make payments directly to the third-party administrator and these payments are then remitted to the District. There is no associated cost to the District under this program. In accordance with Chapter 169, RSMo, the District offers continued healthcare benefits to employees who are eligible for normal or early retirement under PSRS or PEERS. The retiree or eligible dependent pays the premium directly to the District. The District currently pays for the implicit rate subsidy associated with these postemployment health care benefits on a pay-as-you- go basis.