Total minimum future rental revenues do not include contingent rentals that may be received under certain
concession leases on the basis of a percentage of the concessionaire's gross revenue in excess of stipulated
minimums. Rent revenue was approximately $51,827,000 for the year ended June 30,1988, including contingent
rentals of approximately $18,318,000. Assets of the Department of Transportation subject to such operating
lease agreements are included in the general fixed assets account group. The cost of these assets was
approximately $252,740,000 at June 30, 1988.

At June 30,1988, the Maryland State Lottery had commitments of approximately $18,700,000 for services
to be rendered relating principally to the operation of the lottery game.

The State is insured for workers' compensation losses by the State Accident Fund under a contract, which
provides for the State to pay premiums based upon loss experience plus a proportionate share of administrative
costs. In the event of termination of the contract, the State is obligated for any premium deficiency existing at
the time of termination. As of June 30, 1988, anticipated workers' compensation claims in the amount of
$62,500,000 applicable to State employees were accrued in the nonexpendable trust fund. For the year ended
June 30, 1988, the State paid the State Accident Fund approximately $20,150,000 in premiums.

19. Contingencies:

The State is party to legal proceedings, which normally occur in governmental operations. Other than the
litigation discussed in Note 15, the legal proceedings are not, in the opinion of the Attorney General, likely to
have a material, adverse impact on the financial position of the affected funds.

As of June 30,1988, mortgage loan insurance programs included in the enterprise funds were contingently
liable as insurer of mortgage loans payable, or portions of mortgage loans payable, in an aggregate amount of
approximately $569,700,000 (including $426,883,000 for the economic development loan programs). In addition,
there are commitments to insure mortgage loans which would represent additional contingent liabilities of
approximately $41,801,000.

The Maryland Higher Education Loan Corporation (Corporation), as endorser of student loans, is
contingently liable to lending institutions for purchase of student loans in default. In the event of such default,
the Corporation is liable to the lending institution for the unpaid principal amount of the loan plus unpaid
interest, including interest accrued from the date of default until the date of purchase by the Corporation. At
June 30,1988, the Corporation has endorsed loans outstanding of approximately $765,000,000. These loans are
covered by a federal reinsurance agreement with the U.S. Department of Education. The agreement provides
for repurchase by the U.S. Department of Education of 100% of the amount of loans which default; however,
if the default rate exceeds 5% of the loans in repayment status as of September 30 of the preceding year, the
reinsurance rate is 90%, and for all defaults in excess of 90% the reinsurance rate is 80%.

The State receives significant financial assistance from the U. S. Government. Entitlement to the resources
is generally conditioned upon compliance with terms and conditions of the grant agreements and applicable
Federal regulations, including the expenditure of the resources for eligible purposes. Substantially all grants are
subject to financial and compliance audits by the grantors. Any disallowances as a result of these audits become
a liability of the fund which received the grant. As of June 30, 1988, the State estimates that no material
liabilities will result from such audits.

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