Cash Management

During the year, temporary surpluses of cash in general governmental funds were primarily invested in
repurchase agreements and U.S. Treasury and agency obligations with maturities ranging from one to 181 days.
As of June 30, 1992, the State's cash resources for general governmental funds were invested as follows: in
repurchase agreements, 79.2 percent; in U.S. Treasury and agency obligations, 16.3 percent; and in certificates of
deposit and other, 4.5 percent. The average yield on maturing investments during the year was 4.75 percent, as
compared to 7.3 percent in the prior year, and the amount of interest received was $33,189,000, which was
$40,514,000 less than the previous year.

Risk Management

The State is involved in legal proceedings, which normally occur in government operations. Such proceedings,
in the opinion of the Attorney General, are not likely to have a material adverse impact on the financial position of
the State's funds.

The State continues to replace commercial insurance with self insurance coverage wherever feasible. The
self-insured exposures include the first layer of all direct property coverage for damage to State property, all
liability claims under the Maryland Tort Claim Act, other liability judgements and settlements arising from
actions in which a violation of a constitutional right is asserted and various other coverages such as volunteer
accident and fidelity bonds. Claim adjusting services have been brought "in-house" and are being done by State
personnel instead of outside contractors.

Commercial insurance coverage is purchased for specialized exposures such as aviation hull and liability,
steam boiler coverage and certain transportation risks.

OTHER INFORMATION

The statutes of the State require an audit of every unit of the Executive and Judicial branches of government,
including the Comptroller of the Treasury's records, by the Legislative Auditor at least every two years. The
Legislative Auditor is required to be and is a certified public accountant. The Legislative Auditor makes fiscal,
compliance and performance audits of the various agencies and departments of the State and issues a separate
report covering each of those audits. Although certain of those reports include presentations of detailed financial
data and contain expressions of opinion thereon, the audits are usually not made for that purpose. The primary
purpose of the reports is to present the Legislative Auditor's findings relative to the fiscal management of those
agencies and departments.

Additionally, my office requires an audit of the State's general purpose financial statements by a firm of
independent certified public accountants selected by an audit selection committee composed of members from the
Executive and Legislative branches of State government. This requirement has been complied with, and the
opinion of Arthur Andersen & Co. been included in the financial section of this report. Arthur Andersen & Co.
performs audits to meet the requirements of the federal Single Audit Act of 1984, 0MB Circular A-128, and 0MB
Circular A-133; such information being contained in other reports.

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate
of Achievement for Excellence in Financial Reporting to the State of Maryland for its comprehensive annual
financial report for the fiscal year ended June 30,1991.

In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and
efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such
reports must satisfy both generally accepted accounting principles and applicable legal requirements.

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