On May 25, 1989, the University of Maryland System (System) issued $70,396,000 of revenue bonds
(refunding bonds). The refunding bonds, which are dated May 1, 1989, consist of $51,635,000 of serial bonds
with interest rates ranging from 6.7% to 7% and mature annually through the year 2000, $8,376,000 of capital
appreciation bonds which mature annually from 2001 through 2004 carrying yields to maturity ranging from
7% to 7.15%, and $10,385,000 of term bonds bearing interest at 7.2% and maturing in 2009. The serial capital
appreciation bonds are callable at premiums ranging from 3% in 1999 to 1% in 2002 and at par thereafter.
The proceeds of the bonds, plus cash and short-term investments of $7,878,000 previously held in trust funds,
were used to purchase government obligations, which pursuant to an Escrow Deposit Agreement dated May
25, 1989, were irrevocably deposited with an escrow agent to provide for all future debt service payments
required on their outstanding revenue bonds (refunded bonds) aggregating $76,380,000. As a result of these
transactions, the refunded bonds are considered to be legally defeased and the liability for those bonds has
been removed from the balance sheet. The system advance refunded the bonds in order to reduce future debt
service payments by $11,540,000. The advance refunding resulted in an economic loss (the excess of the
present value of future debt service payments on the new bonds over the present value of debt service
payments previously required for the refunded bonds) of $454,000.

On May 11, 1989, the System entered into an agreement with an escrow agent to extinguish $5,710,000
of certain revenue bonds then outstanding. The agreement required the System to irrevocably deposit
$4,873,000 of cash and short-term investments with the escrow agent for the purchase of securities, the
maturity and earning of which will satisfy the debt service requirements of the bonds, and resulted in a gain
of $837,000.

The bonds issued are the debt and obligation of the University and are not a debt and obligation of, or
pledge of, the faith and credit of the State.

Obligations Under Capital Leases:

Obligations under capital leases of $45,694,000 exist as of June 30,1989, bearing interest at annual rates
ranging from 3.9% to 18%. The following is a schedule of annual future minimum payments under these
obligations, along with the present value of the related net minimum payments as of June 30,1989 (amounts
expressed in thousands):

Years ending
June 30,	Amount
1990	$ 11,551
1991	8,109
1992	7,291
1993	6,210
1994	5,158
1995 and thereafter	84,093
Total future minimum
payments	122,412
Less amount
representing interest	76,718
Present value of net
minimum lease
payments	$ 45,694

13. Contributed Capital:

The changes in contributed capital of the enterprise funds for the year ended June 30,1989, are as follows
(amounts expressed in thousands):

	Economic	Development	Maryland	Maryland
	Insurance	Loan	Transportation	Environmental	State Use
	Programs	Programs	Authority	Service	Industries	Total
Balance, July 1, 1988 .................	$66,795	$147,738	$763,785	$12,657	$385	$ 991,360
Contributions .......................	2,750	23,838		518		27,106
Depreciation on contributed assets ......				(1,381)		(1,381)
Balance, June 30, 1989 ...............	$69,545	$171,576	$763,785	$11,794	$385	$1,017,085

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