certain capital facilities, including those provided to political subdivisions and other public organizations are
accounted for in the capital projects fund. Such resources are derived principally from proceeds of general obligation
bond issues, federal grants and operating transfers from the State's general fund.

The State enters into long-term contracts for construction of major capital projects and records the
commitments as encumbrances. The State pays the cost of capital projects principally from resources obtained
from general obligation bond proceeds, operating transfers from the general fund and federal grants. These
resources are received, in many cases, after the long-term contracts are executed and recorded as encumbrances.
Accordingly, the undesignated fund balance of the capital projects fund reflects a deficit. This deficit will be funded
by future bond proceeds and capital appropriations from the general fund (see Note 8).

PROPRIETARY FUND TYPE

Enterprise Funds:

The enterprise funds include:

1. Economic Development:

Direct loan and loan insurance programs of the Maryland Department of Economic and Community
Development.

2. Maryland Food Center Authority, which owns and operates warehouse facilities for use by wholesale food
distributors.

3. Maryland Transportation Authority, which constructs, maintains and operates transportation toll facilities.

4. Maryland State Lottery, which operates the State Lottery.

5. Maryland Environmental Service, which constructs, maintains and operates water supply and liquid and
solid waste disposal facilities.

6. State Use Industries, which utilizes inmate labor from State correctional institutions to manufacture goods,
wares and merchandise to be sold to State agencies, political subdivisions and charitable, civic, educational,
fraternal or religious associations or institutions.

7. Maryland Higher Education Loan Corporation, which assists resident students in meeting costs of attending
approved institutions by guaranteeing loans made by commercial lenders.

8. Maryland Deposit Insurance Fund Corporation, which insures the deposits of member state-chartered savings
and loan associations.

FIDUCIARY FUND TYPES

Transactions related to assets held by the State in a trustee or agency capacity are accounted for in fiduciary
fund types. Fiduciary fund types are comprised of:

1. Expendable Trust Funds:

a. Deferred Compensation Plan:

This fund accounts for the amounts withheld from employees and invested in the plan as the employee
has directed. The net assets of this fund aggregating $187,913,000 are available to the general creditors
of the State.

b. Employment Security Administration:

This fund accounts for the unemployment taxes collected from employers, federal revenue received and
remittance of benefits to the unemployed.

2. The nonexpendable trust fund reflects the transactions, assets, liabilities and fund equity of the State
Accident Fund. The fund was established to provide workers' compensation insurance for participating
employers in the State, including the State of Maryland.

3. The pension trust fund reflects the transactions, assets, liabilities and fund equities of the State administered
retirement and pension systems.

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