That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. March 26, 2021

CITY OF CLAYTON, MISSOURI

Page 4 MANAGEMENT’S DISCUSSION AND ANALYSIS

The management of the City of Clayton, Missouri presents this narrative overview and analysis to assist our readers in reviewing and understanding the accompanying annual financial statements for the fiscal year ended September 30, 2020. We encourage readers to consider the information presented here in conjunction with additional information that is furnished in the letter of transmittal which can be found on pages i-vi of this report.

Financial Highlights

 On a government-wide basis the assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources for the most recent fiscal year by $96,431,873. Of this amount, $16,930,909 may be used to meet the City’s ongoing obligations to citizens and creditors.

 The City’s total net position increased by $1,564,429 due to revenues exceeding expenses.

 At the close of fiscal year 2020, the City’s governmental funds reported an ending fund balance of $35,301,256, an increase of $3,272,846 in comparison to the prior year balance of $32,028,410 due to the issuance of debt for capital projects, offset by project costs; the receipt of a large grant to assist with the effects of the COVID-19 pandemic; and the sale of a significant capital asset. Approximately 43% of the ending fund balance, or $15,011,610, is unassigned and available for spending at the City’s discretion.

 At the end of fiscal year 2020, unassigned fund balance for the general fund was $17,105,672, or 65% of total general fund expenditures.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City of Clayton, Missouri’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains required supplementary information and other supplementary information in addition to the basic financial statements.

Government-wide Financial Statements

The government-wide financial statements are designed to provide readers with an overview of the City’s finances, presenting all funds in a more simplified format. This section is similar to financial reporting used by commercial entities. Note that the government-wide financial statements exclude fiduciary fund (Pension Trust Funds) activities.

The statement of net position presents information on all the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including long-term debt and capital assets in the governmental funds. The difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources is reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as transactions occur,