SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2023 The District as a Whole - Continued Table 2 Changes in Net Position from Operating Results Year Ended June 30, 2023 2022 Governmental activities Business- type activities Total Governmental activities Business- type activities Total Revenues Program revenues Charges for services $ 9,181,393 $ 895,690 $10,077,083 $ 7,648,372 $ 660,499 $ 8,308,871 Operating grants and contributions 2,693,290 - 2,693,290 3,049,495 - 3,049,495 General revenues Property taxes 59,061,373 - 59,061,373 58,232,548 - 58,232,548 Federal and State aid not restricted to specific purposes 1,346,735 - 1,346,735 1,346,610 - 1,346,610 Voluntary student transfer aid 1,060,130 - 1,060,130 1,177,664 - 1,177,664 Other taxes and interest 7,603,435 - 7,603,435 6,844,513 - 6,844,513 Total revenues 80,946,356 895,690 81,842,046 78,299,202 660,499 78,959,701 Expenses Instruction 30,871,858 - 30,871,858 25,539,386 - 25,539,386 Student services 3,092,182 - 3,092,182 2,751,484 - 2,751,484 Support services 2,673,725 - 2,673,725 2,347,136 - 2,347,136 Building administration 2,780,060 - 2,780,060 2,283,301 - 2,283,301 Executive administration 3,321,825 - 3,321,825 2,333,735 - 2,333,735 Business services 1,047,852 - 1,047,852 920,634 - 920,634 Central office support services 6,220,418 - 6,220,418 5,360,490 - 5,360,490 Operation of plant 12,507,097 - 12,507,097 11,780,755 - 11,780,755 Security services 271,247 - 271,247 228,377 - 228,377 Nonreimbursable transportation 317,422 - 317,422 160,672 - 160,672 Food services 1,075,550 - 1,075,550 1,064,557 - 1,064,557 Adult/community programs 1,174,870 - 1,174,870 1,215,032 - 1,215,032 Interest and other charges 1,624,525 - 1,624,525 1,847,829 - 1,847,829 Local district services - 609,994 609,994 - 513,699 513,699 Total expenses 66,978,631 609,994 67,588,625 57,833,388 513,699 58,347,087 Excess (deficiency) before other income and transfers 13,967,725 285,696 14,253,421 20,465,814 146,800 20,612,614 Other income Transfers (2,188,590) 2,188,590 - 157,755 (157,755) - Total other income (2,188,590) 2,188,590 - 157,755 (157,755) - Change in net position 11,779,135 2,474,286 14,253,421 20,623,569 (10,955) 20,612,614 Beginning net position 49,386,992 64,799 49,451,791 28,763,423 75,754 28,839,177 Ending net position $ 61,166,127 $ 2,539,085 $63,705,212 $ 49,386,992 $ 64,799 $49,451,791 - 12 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2023 Governmental and Business-Type Activities As reported in the Statement of Activities, the cost of all governmental and business-type activities totaled $67.6 million in fiscal year 2023. However, the District’s local taxpayers ultimately funded $54.8 million or 82.3% of these costs because some of the costs were paid by those who benefited from the programs ($10.1 million), and by operating grants and contributions ($2.7 million). Table 3 shows the cost of each of the District’s largest functions, as well as each function’s net cost (total cost less revenue generated by the activities). The net cost shows the financial burden that was placed on the District’s taxpayers by each of the functions. Providing this information allows citizens to consider the cost of each function in comparison to the benefits they believe are provided by that function. Table 3 Net Cost of Governmental Activities Year ended June 30, 2023 2022 Total cost of services Net cost of services Total cost of services Net cost of services Governmental activities Instruction $ 30,871,858 $ 28,747,102 $ 25,539,386 $ 23,843,893 Student services 3,092,182 2,947,668 2,751,484 2,609,139 Support services 2,673,725 1,959,580 2,347,136 1,791,889 Administration 7,149,737 6,960,557 5,537,670 5,566,154 Operation of plant 12,778,344 11,764,464 12,009,132 11,159,121 Other 8,788,260 1,100,052 7,800,751 317,496 Interest and other charges 1,624,525 1,624,525 1,847,829 1,847,829 66,978,631 55,103,948 57,833,388 47,135,521 Business-type activities Local district services 609,994 (285,696) 513,699 (146,800) Total $ 67,588,625 $ 54,818,252 $ 58,347,087 $ 46,988,721 Instruction expenses include activities directly involved in the teaching of pupils, and the interaction between teacher and pupil. The cost of instruction is greater than the prior year primarily due to the allocation of the net pension liability as the prior year had a much larger allocation. Instruction increased by $1.1 million on a cash basis approach. Student services are those services which provide administrative, technical (such as guidance and health), and logistical support to facilitate and enhance instruction, and to a lesser degree, community services. Support services include the activities involved with assisting staff with the content and process of teaching to pupils as well as library services. - 13 -

Student services are those services which provide administrative, technical (such as guidance and health), and logistical support to facilitate and enhance instruction, and to a lesser degree, community services. Support services include the activities involved with assisting staff with the content and process of teaching to pupils as well as library services. - 13 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2023 Governmental and Business-Type Activities - Continued Administration includes expenses associated with administrative and financial supervision of the District. The cost of administration is greater than the prior year primarily due to the allocation of the net pension liability as the prior year had a much larger allocation. Also, the District spent more on cyber security and administrative technology equipment. Operation of plant activities involves maintaining school grounds, buildings, and equipment in an effective working condition. Other includes services for transportation, food, communications, human resources, and expenses for the District self funding its health insurance plan. Interest and other charges are transactions associated with the payment on debt of the District. Business-type activities are services provided to constituents of the District where all or most of the costs involved are recovered through services charged to the users of such services or from transfers from other funds. The dependence upon tax revenues is apparent. Over 93.1% of instruction activities are supported through taxes and other general revenues; for all governmental activities, general revenue support is 82.3%. The District’s Funds The District uses funds to control and manage money for particular purposes. A review of the funds provides some insight as to whether the District is being accountable for the resources taxpayers and others provide to it, and also provides insight into the District’s overall financial health. In total, governmental funds had a fund balance of $45.5 million at June 30, 2023. This represents an overall increase of $3.2 million. The General Fund had a slight decrease in overall revenue due to less federal, COVID-related grants in comparison to the prior year. The Special Revenue Fund had a slight decrease in local revenue while the Capital Projects fund had an increase in local revenue as the property tax levy was adjusted to increase revenue in the Capital Projects Fund for FY23. Expenditures for the Special Revenue Fund were similar to the prior year. The Debt Service Fund expenditures were in accordance with scheduled debt payments. The Capital Projects Fund had an increase in expenditures of approximately $2.3 million, from the prior year, in accordance with planned expenditures for the safety and security plan and for the renovation of the Clayton High School library. The overall position of the District’s funds remains financially strong and the District is able to meet all of its ongoing operational expenditures without having to resort to short-term financing activities. - 14 -

The Capital Projects Fund had an increase in expenditures of approximately $2.3 million, from the prior year, in accordance with planned expenditures for the safety and security plan and for the renovation of the Clayton High School library. The overall position of the District’s funds remains financially strong and the District is able to meet all of its ongoing operational expenditures without having to resort to short-term financing activities. - 14 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2023 Operating Funds (General and Special Revenue Funds Combined) - Budgeting Highlights In accordance with Chapter 67, RSMo, the District adopts a budget for each fund. While the District uses its funding judiciously, there are a number of factors that affect the budget over which the District has little or no control. The District uses site-based budgeting which is designed to tightly control site budgets but provide flexibility for site management. During the year the District revises the budget to deal with unexpected changes in revenues and expenditures as additional information becomes available. Schedules showing the District’s original and final budget amounts compared with actual amounts paid and received for the General and Special Revenue Funds are provided later in this report as required supplementary information. The District’s financial strength is derived primarily from its strong local property values as over 78.1% of the District’s operating revenues are generated through local property taxes. Under Missouri Statutes, property tax rates fluctuate with changes in assessed values preventing windfall revenue increases during periods of growing property values. This mechanism also protects taxing entities during periods of falling property values and has minimized the impacts of recent property value declines. The 2022-2023 property tax revenues for all funds slightly decreased by $0.6 million or 1.02% from the 2021-2022 totals primarily because of a small increase in uncollected and protested property taxes. The District did not revise the original property tax budget and property tax revenues finished the year $1.3 million above the budget for all funds. For the year ended June 30, 2023, the General Fund cash basis actual expenditures were approximately $1.8 million less than final budgeted amounts. Instructional supplies and textbooks were lower than budget by $180,000 and student activities was lower by $74,000. Professional development travel was $101,000 lower due to the continued effects of COVID as well as the District conducted more on-site professional development. Additionally, the District's contribution to the Center of Clayton operations was approximately $310,000 less than budgeted partially due to a timing difference. Food Service was $212,000 less than budget based upon operations. Operation of Plant supplies and repairs were $94,000 less than budgeted as expenditures are based upon needs. Lastly, utilities were $79,000 less than budget. Missouri law prohibits the District from spending more than the budget per fund. The Special Revenue Fund budgetary basis actual expenditures were approximately $0.7 million less than the final budget primarily in the function of Instruction. Expenditures were lower than budget in salaries and benefits partially due to less substitute teacher expenditures and lower expenditures for extra pay stipends for student activities and athletics. For the year ended June 30, 2023, the combined General and Special Revenue change in fund balances were approximately $4.4 million greater than the 2022-2023 final budget. - 15 -

Expenditures were lower than budget in salaries and benefits partially due to less substitute teacher expenditures and lower expenditures for extra pay stipends for student activities and athletics. For the year ended June 30, 2023, the combined General and Special Revenue change in fund balances were approximately $4.4 million greater than the 2022-2023 final budget. - 15 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2023 Capital Assets, Right-to-use Assets and Debt Administration Capital Assets At June 30, 2023, the District had capital assets and right-to-use assets with a net book value of $103.1 million, which includes $62.6 million in accumulated depreciation/amortization. Table 4 shows a breakdown of capital assets, net of accumulated depreciation/amortization, at year end. Table 4 Capital Assets - Net June 30, 2023 2022 Governmental activities Business- type activities Total Governmental activities Business- type activities Total Land $ 714,536 $ - $ 714,536 $ 714,536 $ - $ 714,536 Buildings and improvements 97,173,959 - 97,173,959 96,247,346 - 96,247,346 Furniture and equipment 4,639,107 76,963 4,716,070 4,017,214 64,799 4,082,013 Right-to-use assets 482,009 - 482,009 509,552 - 509,552 Total $ 103,009,611 $ 76,963 $ 103,086,574 $ 101,488,648 $ 64,799 $ 101,553,447 The total additions for the year were $6.3 million which consisted of $4.5 million of building and improvements and $1.8 million in furniture and equipment purchases. Debt Administration At June 30, 2023, the District had $44.2 million in general obligation bonds outstanding. Missouri statute allows school districts to incur debt up to an amount equal to 15% of the most current assessed valuation. The District’s allowable debt margin was approximately $171.1 million at June 30, 2023, far above the District’s current level of debt. The District’s Debt Service levy for 2022-2023 was $0.623 per $100 of assessed valuation. The Debt Service Fund balance at June 30, 2023 was $8.3 million and equal to nearly 84.0% of the fiscal year 2024 annual debt service payments. Starting in fiscal year 2022 the District was required to place funds into a sinking fund for the 2009A bond issue. At June 30, 2023 these funds total $3.0 million and are shown as restricted cash on the financial statements. These funds will be held in the sinking fund to be used towards the March 1, 2024 bond payment. The District’s bond rating is AAA with Standard and Poor’s. Other long-term liabilities of the District include compensated absences and a capital lease for renovation and improvement projects. Additional information about debt is provided in Note E. - 16 -

Other long-term liabilities of the District include compensated absences and a capital lease for renovation and improvement projects. Additional information about debt is provided in Note E. - 16 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2023 Economic Factors and Fiscal Year 2023-2024 Budget The Board of Education, together with staff, parents and patrons of the District are united in our commitment to student learning. Our mission, vision and core values embody why we are here, what we want our students to become, and the principles that guide our work. The District’s mission to inspire each student to love learning and embrace challenge within a rich and rigorous academic culture, and the vision to develop leaders who shape the world through independence, creativity and critical thinking set the standard for the education we provide. The Profile of the Clayton Graduate describes the attributes we hope for every Clayton graduate. The profile envisions graduates who are self-actualized, intellectually curious, culturally competent, empathetic, creative thinkers and collaborative. The profile influences our approach to learning. The spending plan set forth in the budget is designed to support the mission, strategic plan, goals and objectives of the District as adopted by the Board of Education while ensuring fiscal responsibility to the community. The District’s strategic plan is developed around three goals:  Goal #1 – A place for everyone… We will ensure all learners, regardless of their identity, feel safe and valued.  Goal #2 - …to grow as learners… We will commit to the educational growth of our learners through an equitable, personalized and individualized learning experience.  Goal #3 - …in head and heart. We will be dedicated to the personal growth of our learners in their social, emotional and physical well-being. Financial resources are allocated in accordance with the goals and objectives outlined within the strategic plan. Preparation of the budget involves input from staff, administrators and instructional leaders throughout the District. The School District of Clayton is located in the hub of the St. Louis metropolitan area. Through the decades, the area has experienced steady and prosperous growth. The central location, accessibility and convenience continue to draw business and residents to the area. The resulting vibrant business community and premier residential neighborhoods provide a solid economic base for the school district. Nevertheless, a variety of economic factors influence the financial condition and financial stability of the school district. These economic factors include:  Birth rates, school enrollment and student attendance  New and ongoing investment in the community producing growth in Assessed Valuation combined with property tax rates  Rate of inflation and its effects on the cost of labor, employee benefits, services and supplies  Interest rates and the effects on borrowing costs and rates of return on cash reserves - 17 -