Management’s Discussion and Analysis (Unaudited) As management of the Village of Grafton, we offer readers of the Village of Grafton’s financial statements this narrative overview and analysis of the financial activities of the Village of Grafton for the year ended December 31, 2016. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 - 7 of this report. Financial Highlights • The assets and deferred outflows of resources of the Village of Grafton exceeded its liabilities and deferred inflows of resources as of December 31, 2016, by $72,216,086 (net position). Of this amount, $10,651,418 may be used to meet the government’s ongoing obligations to citizens and creditors (unrestricted net position). The total net position includes all infrastructure installed from 1980 to present. • The Village of Grafton’s total net position increased by a net amount of $249,564 with a $1,009,026 decrease in unrestricted net position. • As of December 31, 2016, the Village of Grafton’s governmental funds reported combined ending fund balances of $9,887,994 an increase of $556,932 in comparison with the prior year. Approximately 63 percent of this total, or $6,211,857, is available for spending at the government’s discretion (committed, assigned and unassigned fund balance). • As of December 31, 2016 the assigned and unassigned fund balance for the general fund was $3,200,187 approximately 34 percent of total anticipated general fund expenditures for 2017. • The Village of Grafton’s total general obligation debt increased by $881,974 (2.4%) during 2016. General Corporate Purpose Bonds were issued on June 8, 2016 in the amount of $1,130,000 for projects related to Tax Incremental District No. 3 (Downtown Redevelopment) and $2,910,000 for sewer projects. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Village of Grafton’s basic financial statements. These basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Village of Grafton’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the Village of Grafton’s assets, deferred outflow of resources, liabilities and deferred inflow of resources, with the difference between the four reported as net position. Over time, increases or decreases in 14