SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2021 The District as a Whole - Continued Table 2 Changes in Net Position from Operating Results Year Ended June 30, 2021 2020 Government al activities Business- type activities Total Government al activities Business- type activities Total Revenues Program revenues Charges for services $ 7,082,213 $ 214,498 $ 7,296,711 $ 7,898,300 $ 522,090 $ 8,420,390 Operating grants and contributions 2,665,107 - 2,665,107 2,254,982 - 2,254,982 General revenues Property taxes 54,136,381 - 54,136,381 59,764,410 - 59,764,410 Federal and State aid not restricted to specific purposes 1,363,114 - 1,363,114 1,987,417 - 1,987,417 Voluntary student transfer aid 1,192,928 - 1,192,928 1,367,251 - 1,367,251 Other taxes and interest 5,947,676 - 5,947,676 7,048,608 - 7,048,608 Total revenues 72,387,419 214,498 72,601,917 80,320,968 522,090 80,843,058 Expenses Instruction 33,095,847 - 33,095,847 32,333,373 - 32,333,373 Student services 3,184,280 - 3,184,280 2,918,501 - 2,918,501 Support services 2,252,971 - 2,252,971 2,219,105 - 2,219,105 Building administration 2,914,602 - 2,914,602 3,049,902 - 3,049,902 Executive administration 3,462,879 - 3,462,879 3,281,145 - 3,281,145 Business services 953,920 - 953,920 928,638 - 928,638 Central office support services 5,210,439 - 5,210,439 4,772,627 - 4,772,627 Operation of plant 11,648,079 - 11,648,079 11,754,267 - 11,754,267 Security services 190,429 - 190,429 171,267 - 171,267 Nonallowable transportation 110,803 - 110,803 192,241 - 192,241 Food services 582,583 - 582,583 966,005 - 966,005 Adult/community programs 1,100,991 - 1,100,991 1,134,749 - 1,134,749 Facilities acquisition and construction 1,248,861 - 1,248,861 4,572,239 - 4,572,239 Interest and other charges 2,092,471 - 2,092,471 3,154,927 - 3,154,927 Local district services - 379,656 379,656 - 587,773 587,773 Total expenses 68,049,155 379,656 68,428,811 71,448,986 587,773 72,036,759 Excess (deficiency) before other income and transfers 4,338,264 (165,158) 4,173,106 8,871,982 (65,683) 8,806,299 Other income Proceeds from capital lease 550,867 - 550,867 - - - Transfers (153,145) 153,145 - (109,325) 109,325 - Total other income 397,722 153,145 550,867 (109,325) 109,325 - Change in net position 4,735,986 (12,013) 4,723,973 8,762,657 43,642 8,806,299 Beginning net position 24,027,437 87,767 24,115,204 15,264,780 44,125 15,308,905 Ending net position $ 28,763,423 $ 75,754 $ 28,839,177 $ 24,027,437 $ 87,767 $ 24,115,204 - 12 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2021 Governmental and Business-Type Activities As reported in the Statement of Activities, the cost of all governmental and business-type activities totaled $68.4 million in fiscal year 2021. However, the District’s local taxpayers ultimately funded $54.1 million or 79.1% of these costs because some of the costs were paid by those who benefited from the programs ($7.3 million), by other governments and organizations who subsidized certain programs ($3.9 million), and by miscellaneous sources ($7.3 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, 2021 2020 Total cost of services Net cost of services Total cost of services Net cost of services Governmental activities Instruction $ 33,095,847 $ 31,061,572 $ 32,333,373 $ 30,672,612 Student services 3,184,280 3,059,448 2,918,501 2,918,501 Support services 2,252,971 2,157,269 2,219,105 2,135,607 Administration 7,331,401 7,215,979 7,259,685 7,247,733 Operation of plant 11,838,508 10,741,206 11,925,534 9,970,013 Facilities acquisition and construction 1,248,861 1,248,861 4,572,239 4,572,239 Other 7,004,816 725,029 7,065,622 624,072 Interest and other charges 2,092,471 2,092,471 3,154,927 3,154,927 68,049,155 58,301,835 71,448,986 61,295,704 Business-type activities Local district services 379,656 165,158 587,773 65,683 Total $ 68,428,811 $ 58,466,993 $ 72,036,759 $ 61,361,387 Instruction expenses include activities directly involved in the teaching of pupils, and the interaction between teacher and pupil. 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. Administration includes expenses associated with administrative and financial supervision of the District. Operation of plant activities involves maintaining school grounds, buildings, and equipment in an effective working condition. - 13 -

Administration includes expenses associated with administrative and financial supervision of the District. Operation of plant activities involves maintaining school grounds, buildings, and equipment in an effective working condition. - 13 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2021 Governmental and Business-Type Activities - Continued 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 93.9% of instruction activities are supported through taxes and other general revenues; for all governmental activities, general revenue support is 85.7%. 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 $34.3 million at June 30, 2021. This represents an overall increase of $0.3 million from the prior year. The increase was primarily a result of reduced expenditures as less funds were spent on travel, supplies, food service and overtime as a result of COVID-19. Expenditures for the Special Revenue Fund were slightly less than budgeted as fewer extra pay stipends were awarded due to COVID-19. The Debt Service Fund decreased due to the scheduled debt payments. The Capital Projects Fund had a planned increase in expenditures as the remaining proceeds from the fiscal year 2019 capital lease were expended in the current year. 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. 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. - 14 -

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. - 14 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2021 Operating Funds (General and Special Revenue Funds Combined) - Budgeting Highlights - Continued The District’s financial strength is derived primarily from its strong local property values as over 83.0% 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 2020-2021 property tax revenues for all funds decreased by approximately $2.3 million or 4.0% from the 2019-2020 totals primarily because of the settlement of protested property tax cases in favor of the taxpayer by St. Louis County. 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 $1.3 million below the original budget and approximately $0.5 million above the revised budget for all funds. For the year ended June 30, 2021, the General Fund budgetary basis actual expenditures were approximately $3.7 million less than final budgeted amounts. COVID-19 caused expenditures to be less for student activities by approximately $634 thousand, for food services by approximately $724 thousand, for summer fee-based programs by approximately $486 thousand, for utilities by approximately $239 thousand, for training and professional travel by approximately $366 thousand, for purchased services by $286 thousand and for supplies by approximately $381 thousand. 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 primarily due to COVID-19 reducing the amount of extra pay stipends for student activities, summer programs, and athletics as well as reducing the cost of substitute teacher expenditures. For the year ended June 30, 2021, the combined General and Special Revenue change in fund balances was approximately $3.6 million greater than the 2020-2021 final budget. Missouri law prohibits a district from overspending the expenditure budget per fund. - 15 -

For the year ended June 30, 2021, the combined General and Special Revenue change in fund balances was approximately $3.6 million greater than the 2020-2021 final budget. Missouri law prohibits a district from overspending the expenditure budget per fund. - 15 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2021 Capital Assets and Debt Administration Capital Assets At June 30, 2021, the District had capital assets with a net book value of $102.0 million, which includes $55.0 million in accumulated depreciation. Table 4 shows a breakdown of capital assets, net of accumulated depreciation, at year end. Table 4 Capital Assets - Net June 30, 2021 2020 Governmental activities Business- type activities Total Governmental activities Business- type activities Total Land $ 714,536 $ - $ 714,536 $ 714,536 $ - $ 714,536 Construction in progress - - - 2,362,709 - 2,362,709 Buildings and improvements 97,784,161 - 97,784,161 96,015,678 - 96,015,678 Furniture and equipment 3,448,299 75,754 3,524,053 3,338,060 87,767 3,425,827 Total $ 101,946,996 $ 75,754 $ 102,022,750 $ 102,430,983 $ 87,767 $ 102,518,750 The total additions for the year were $3.8 million which consisted of $2.7 of building and improvements and $1.0 in furniture and equipment purchases. In June 2019, the District entered into an approximately $5.1 million capital lease for the purpose of renovation and improvements to Meramec Elementary and to fund capital contributions to the joint venture Clayton Recreation, Sports and Wellness Commission which is undergoing a $10 million renovation project. The remaining lease proceeds were spent in the current year. Debt Administration At June 30, 2021, the District had $55.8 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 $147.0 million at June 30, 2021, far above the District’s current level of debt. The District’s Debt Service levy for 2020-2021 was $0.623 on each $100 of assessed valuation. The Debt Service Fund balance at June 30, 2021 was $5.4 million and equal to nearly 73.8% of the fiscal year 2022 annual debt service expense. The District’s bond rating is AAA with Standard and Poor’s. Other long-term liabilities of the District include compensated absences and capital leases 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 capital leases 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, 2021 Economic Factors and Fiscal Year 2021-2022 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 will serve as a guide for where we are going over the next three to five years, we will also be purposeful about being reflective and make adjustments along the way. We are taking an evergreen approach to our strategic plan. This means we will evaluate it more often and make changes as needed based on evidence we gather. We will 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.. - 17 -