Varying degrees of assurance are provided by the auditor regarding supplemental information. A user of this report should read the Independent Auditors' Report carefully to ascertain the level of assurance being provided for each of the other parts in the financial section. - 8 - SCHOOL DISTRICT OF CLAYTON MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED Year ended June 30, 2020 Reporting the District as a Whole Statement of Net Position and the Statement of Activities The analysis of the District as a whole begins on page 21. This analysis provides answers to whether the District is financially stronger or weaker as a result of the year’s activities. The Statement of Net Position and the Statement of Activities, which appear first in the District’s financial statements, report information on the District as a whole and its activities in a way that helps answer this question. These statements include all assets and liabilities, using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year’s revenues and expenses regardless of when cash is received or paid. These two statements report the District’s net position – the difference between assets and deferred outflows compared to liabilities and deferred inflows, as reported in the Statement of Net Position. It is one way to measure the District’s financial health, or financial position. Over time, increases or decreases in the District’s net position – as reported in the Statement of Activities – is one indicator of whether its financial health is improving or deteriorating. The relationship between revenues and expenses indicates the District’s operating results. However, the District’s mission is to provide services to students, not to generate profits as commercial entities strive to do each year. Non-financial factors, such as the quality of the education provided, safety of the schools, facility conditions, the District’s property tax base and current state laws restricting revenue growth must also be considered to assess the overall health of the District. The Statement of Net Position and the Statement of Activities report the following activity for the District’s programs and services: Governmental Activities – Most of the District’s services, which includes instruction, support and plant services, are reported here. Property taxes, voluntary student transfer aid, state foundation and categorical grants, and state and federal grants finance most of these activities. Business-type Activities – The District’s business-type activities include 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. - 9 -