We have examined the general purpose financial statements of the State of Maryland as of and for the year
ended June 30, 1988, as listed in the Table of Contents. Our examination was made in accordance with
generally accepted auditing standards and, accordingly, included such tests of the accounting records and such
other auditing procedures as we considered necessary in the circumstances. We did not examine the financial
statements of the loan insurance programs and two loan programs of the Maryland Departments of Housing
and Community Development and Economic and Employment Development, Maryland Food Center
Authority, Maryland Transportation Authority, Maryland State Lottery, Maryland Stadium Authority and
Maryland Higher Education Loan Corporation, which statements reflect total assets, revenues and expenses
constituting 90 percent, 96 percent and 92 percent, respectively, of the related combined totals for Enterprise
Funds. These statements were examined by other auditors whose reports thereon have been furnished to us,
and our opinion expressed herein, insofar as it relates to the amounts included for the above mentioned units,
is based only upon the reports of other auditors.

As discussed more fully in Note 15 to the financial statements, the State of Maryland Deposit Insurance Fund
Corporation (MDIFC), an agency of the State, insures member savings and loan associations' savings deposits.
At June 30, 1988, the financial statements of MDIFC reflect a deficiency in assets of $190,653,000 after
accrual for estimated losses on insured savings deposits of $400,000,000. Any State funding of actual losses
on insured deposits in excess of MDIFC's resources is dependent upon future legislative action. In addition,
MDIFC is a party to several lawsuits, the outcome of which cannot presently be determined. As a result, the
ultimate outcome of the savings and loan situation cannot be determined at this time. We have examined the
financial statements of MDIFC as of June 30, 1988 (not separately presented herein but included in the
combined Proprietary Fund Type financial statements) and in our report dated October 6,1988, we expressed
an opinion subject to the effects of such adjustments, if any, as might have been required had the outcome
of the uncertainties discussed in the preceding sentences been known.

In our opinion, based upon our examination and the reports of other auditors, the general purpose financial
statements referred to above present fairly the financial position of the State of Maryland at June 30, 1988,
and the results of its operations and the changes in financial position of its Enterprise Funds, Nonexpendable
Trust Fund and Pension Trust Fund for the year then ended, in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding year.

Our examination was made for the purpose of forming an opinion on the general purpose financial statements
taken as a whole. The combining financial statements and schedules listed in the Table of Contents are
presented for purposes of additional analysis and to meet legal reporting requirements and are not a required
part of the general purpose financial statements of the State of Maryland. Except for the Schedules of
Estimated Revenues and General, Special, Federal, Current Unrestricted and Current Restricted Fund
Appropriations-Budgetary Basis for the year ending June 30,1989 (pages 78 and 79), the information has been
subjected to the auditing procedures applied in the examination of the general purpose financial statements
and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial
statements taken as a whole.

The other data included in this report have not been audited by us and, accordingly, we express no opinion
on such data.

Certified Public Accountants Touche Ross International

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