The Capital Projects Fund had an increase in expenditures of approximately $2.0 million, from the prior year, in accordance with planned expenditures for the safety and security plan. 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, 2022 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 79.3% 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 2021-2022 property tax revenues for all funds increased by approximately $3.0 million or 5.40% from the 2020-2021 totals primarily because of reassessment, new construction and less protested property tax cases. The District revised the original current property tax budget after assessed valuation information was obtained from St. Louis County. Property tax revenues finished the year approximately $26,000 below the original budget and approximately $140,000 above the revised budget for all funds. For the year ended June 30, 2022, the General Fund cash basis actual expenditures were approximately $2.8 million less than final budgeted amounts. COVID-19 caused expenditures to be less for student activities by approximately $578,000, for food services by approximately $170,000, for transportation by approximately $76,000, and for training and professional travel by approximately $256,000. Additionally, the District's contribution to the Center of Clayton operations was approximately $185,000 less than budgeted. Lastly, district-wide purchased services were below budget by approximately $663,000 and and district-wide supplies were below budget by approximately $458,000. Missouri law prohibits the District from spending more than the budget per fund. The Special Revenue Fund budgetary basis actual expenditures were approximately $0.8 million less than the final budget primarily in the function of Instruction. Expenditures were lower than budget in salaries and benefits partially due to COVID-19 reducing the amount of extra pay stipends for student activities, professional development, and athletics as well as reducing the cost of substitute teacher expenditures. For the year ended June 30, 2022, the combined General and Special Revenue change in fund balances was approximately $4.0 million greater than the 2021-2022 final budget. - 15 -

Expenditures were lower than budget in salaries and benefits partially due to COVID-19 reducing the amount of extra pay stipends for student activities, professional development, and athletics as well as reducing the cost of substitute teacher expenditures. For the year ended June 30, 2022, the combined General and Special Revenue change in fund balances was approximately $4.0 million greater than the 2021-2022 final budget. - 15 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2022 Capital Assets, Right-to-use Assets and Debt Administration Capital Assets At June 30, 2022, the District had capital assets and right-to-use assets with a net book value of $101.6 million, which includes $59.1 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, 2022 2021 Governmental activities Business- type activities Total Governmental activities Business- type activities Total Land $ 714,536 $ - $ 714,536 $ 714,536 $ - $ 714,536 Buildings and improvements 96,247,346 - 96,247,346 97,247,066 - 97,247,066 Furniture and equipment 4,017,214 64,799 4,082,013 3,448,299 75,754 3,524,053 Right-to-use assets 509,552 - 509,552 537,095 - 537,095 Total $ 101,488,648 $ 64,799 $ 101,553,447 $ 101,946,996 $ 75,754 $ 102,022,750 The total additions for the year were $4.0 million which consisted of $2.4 million of building and improvements and $1.6 million in furniture and equipment purchases. Debt Administration At June 30, 2022, the District had $49.1 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 level was approximately $159.2 million at June 30, 2022, far above the District’s current level of debt. The District’s Debt Service levy for 2021-2022 was $0.623 per $100 of assessed valuation. The Debt Service Fund balance at June 30, 2022 was $5.8 million and equal to nearly 72.4% of the fiscal year 2023 annual debt service payments and sinking fund requirement. Starting in fiscal year 2022 the District was required to place $393,000 into a sinking fund for the 2009A bond issue. These funds are shown as restricted cash on the financial statements and will be held in the sinking fund to be used towards the March 1, 2024 bond payment. Next fiscal year the District is required to place an additional $2.6 million into the sinking fund. 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, 2022 Economic Factors and Fiscal Year 2022-2023 Budget As a community, the students, staff, parents and patrons of the School District of Clayton 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. In addition to the mission, vision and core values, the District also uses our Profile of the Clayton Graduate that describes the attributes we want for every Clayton graduate. We envision graduates who are self-actualized, intellectually curious, culturally competent, empathetic, creative and collaborative. We use this profile to influence our approach to learning and challenge the mental models of what our schools should look like for our students. The Board approved the District’s strategic plan on November 11, 2020. Varied stakeholders developed the strategic plan keeping the end in mind – the students – using the profile as the foundation of the work. The goals of the strategic plan are meant to be aspirational and bold:  We will ensure all learners, regardless of their identity, feel safe and valued.  We will commit to the educational growth of our learners through an equitable, personalized and individualized learning experience.  We will be dedicated to the personal growth of our learners in their social, emotional and physical well-being. Under each of these goals are objectives that are concrete and measurable. While our District’s strategic plan has served as a guide for the past few years, we have been purposeful about being reflective and have made adjustments along the way. We are taking an evergreen approach to our strategic plan. This means we evaluate it more often and make changes as needed based on evidence we gather. We have action steps that are aspirational, attainable, and aligned to our resources. The strategic plan’s data dashboard, which is an interactive tool on the District website, allows all District stakeholders to monitor our progress and hold us accountable to making growth in our goals and objectives.. The District optimizes and aligns resources to ensure we meet stated goals and objectives. To ensure we have both the fiscal and human capital needed, we use an organizational planning model that causes us to annually review our alignment of strategic goals and finances. We build our annual budget based on an organizational structure focused on instruction, human resources, capital improvement, programs and financial sustainability. We use our growth data to determine if the way we are allocating resources is having the impact we expect. The District’s instructional and departmental operating budgets are prepared through a Zero-Based Budgeting (ZBB) approach. This approach helps ensure that the budget is developed to align with priorities for instructional practices and organizational needs. The ZBB approach is built on needs and priorities rather than on historical spending trends. The ZBB process is about creating accountability for what the District spends and transparency of the decisions for where the District spends. - 17 -

The ZBB approach is built on needs and priorities rather than on historical spending trends. The ZBB process is about creating accountability for what the District spends and transparency of the decisions for where the District spends. - 17 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2022 Proposed 2022-2023 total expenditures including normal debt service payments, business-type activities, and extraordinary items total $72.6 million. Projected total revenues, inclusive of business-type, debt service, and extraordinary items of $71.9 million will result in the District strategically spending down reserves of $700,700 for an overall fund balance of $41.2 million. Because many of the revenues and expenditures included in the total budget are restricted for specific purposes, the operating budget more clearly reflects the District’s expected results of operations. The operating revenue budget is projected to remain relatively flat for a total budget of $62.3 million. Real estate taxes are projected to remain flat. The decrease in federal revenue is due to the cessation of the Free & Reduced meal program for all students regardless of eligibility. Other income's increase is primarily due to fee-based student activities with significant fluctuations in revenue closer to pre-pandemic levels. Projected revenue is based upon the best information available at this time as well as historical trends. The operating expenditure budget is projected to increase by $1.1 million or 1.88% to a total of $59.7 million. Fiscal year 2022-2023 is the final year of a two-year salary agreement. For the 2022-2023 school year, an increase for certified staff has been budgeted per the salary agreement. Staffing changed based on enrollment projections and student needs have been budgeted. The staffing changes resulted in a decrease in the salary budget primarily due to the reduction of a full-time teacher at Glenridge as well as Wydown due to shifts in enrollment. In addition, the operating budget supports the maintenance of our facilities and grounds, recommended technology improvements, textbook, musical instrument and athletic uniform replacement, and curriculum implementation plans. The District continues to work to control costs and align resources with priorities while also looking at other strategies to achieve financial balance with minimal impact on students and classrooms. Extraordinary items are not included in the operating expenditure budget, but will reduce fund balances. Extraordinary items include capital requests for copier replacement, technology improvements, and two capital projects approved by the Board of Education. Phase II of safety and security improvements were approved by the Board on February 9, 2022. Approximately $2.5 million of proceeds from the sale of the Maryland Building is available to fund this project. An additional $1.3 million in costs in excess of these designated funds will come from fund balance reserves to fully fund the $3.8 million project. In addition, the Board approved the renovation of the Clayton High School library on April 20, 2022. The $1.5 million cost for the library project will be funded from capital improvement fund balance reserves. - 18 -

In addition, the Board approved the renovation of the Clayton High School library on April 20, 2022. The $1.5 million cost for the library project will be funded from capital improvement fund balance reserves. - 18 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2022 While there are many unknowns in the educational world concerning the COVID-19 pandemic, the District has been responsive to the needs of families to ensure every student receives an equitable education regardless of the learning environment. The District has been allocated approximately $1.6 million in federal COVID relief funds because of the numerous fiscal recovery acts passed by Congress that provide a substantial infusion of resources to help address the costs of operating during a pandemic, the resulting economic fallout and lay the foundation for a strong and equitable recovery. The District utilized these funds to install a needlepoint bi-polar ionization system that is integrated into each building's HVAC system to provide pathogen removal remediation. Further a Contract Tracing Investigator position was added to assist in compliance with St. Louis County mandates related to the coronavirus pandemic. Personal protective equipment (PPE) including facemasks, face shields, hand sanitizer, touchless paper towel dispensers, spray bottles/microfiber towels, desk partitions/dividers, and signage were purchased to provide a safe environment. Technology enhancements were added to improve/assist with online learning. Finally, additional instructional support positions were added to assist in monitoring students' progress. The 2022-2023 budget continues to be impacted by the effects of the COVID-19 closures that took place beginning in March of 2020. The economy is still impacted by many changes from supply chain issues, rising inflation, and increases in the federal fund's target rate. The lasting effects of COVID-19 on the District's revenues and expenditures remain undetermined. The District will continue to work to control costs and align resources with priorities while also looking at other strategies to maintain financial balance with minimal impact on students and classrooms. Operating revenues will fall short of operating expenses and extraordinary items causing a reduction in the operating fund balance of $2.8 million primarily due to one-time capital projects. The 2022-2023 year-end operating fund balances inclusive of business-type activities and extraordinary items are projected at $30.4 million or 46% of budgeted operating expenditures. However, $520,000 has been formally committed by the Board for future capital expenditures. This leaves a net operating fund balance of $29.9 million or 45% of budgeted operating expenditures. As part of the normal budgeting process, long-range projections are developed and continually updated. This process allows the District to determine how much of available resources can be used for ongoing projects, such as new programs or initiatives, versus one-time projects, such as facility repairs. Current long-range projections include new revenue from six developments with approved or pending construction by the Board of Alderman:  Resident Inn by Marriott - 8125 Forsyth Boulevard, Clayton  Clarendale of Clayton - 7651 & 7601 Clayton Road, Clayton  Forsyth Point - 8049 Forsyth Boulevard, Clayton  AC Marriot Hotel - 227 South Central, Clayton  Bemiston Place - 9 North Bemiston Avenue, Clayton  Luxury condominium development - 8250 Forsyth Boulevard, Clayton - 19 -