Changes in the Plan's fund balance for the year ended June 30, 1994, were as follows (amounts expressed in
thousands):

Balance, July1, 1993..................................................................... $12,884

Increases:
Employer contributions............................................................ 8,452

Interest and other investment income................................... 983

Decreases:
Administrative expenses........................................................... (20)

Benefit Payments....................................................................... (6,043)

Balance, June 30, 1994.................................................................. $17,256

Post-Retirement Benefits:

The State also provides, in accordance with State Merit System Laws, postemployment health care benefits to
retired employees and their dependents (generally employees who retired before July 1, 1984, employees who
retired on or after July 1, 1984, with at least 5 years of creditable service and employees who receive disability
retirement allowances or special death benefits). The State subsidizes approximately 50% to 90% of covered
medical and hospitalization costs, depending on the type of insurance plan. The State assesses a surcharge for
postemployment health care benefits which is based on health care insurance charges for current employees.
During fiscal year 1994 these benefits amounted to $44,537,000. There are presently 21,762 participants currently
eligible to receive benefits.

14. Deferred Compensation Plan (Plan):

The State offers its employees a deferred compensation plan created in accordance with Internal Revenue
Code Section 457. The Plan, available to all State employees, permits them to defer a portion of their salary until
future years. Participation in the plan is optional. The deferred compensation is not available to employees until
termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the Plan,
all property and rights purchased with those amounts, and all income attributable to those amounts, property or
rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the
State subject only to the claims of the government's general creditors. Participants' rights under the Plan are equal
to those of general creditors of the State in an amount equal to the fair market value of the deferred account for
each participant.

It is the opinion of the State's legal counsel that the State has no liability for losses under the Plan but does
have the duty of due care that would be required of an ordinary prudent investor. The State believes that it is
unlikely that it will use the assets to satisfy the claims of general creditors in the future.

Investments are managed by the Plan's trustee under one of several investment options, or a combination
thereof. The choice of the investment option(s) is made by the participants.

15. Commitments:

The State leases office space under various agreements that are accounted for as operating leases. Many of the
agreements contain rent escalation clauses and renewal options. Rent expenditures for fiscal year 1994 were
approximately $32,710,000. Future lease expense commitments under these agreements as of June 30,1994, follow
(amounts expressed in thousands):

Years ending
June 30 Amounts

1995................................................................................................ $27,388

1996................................................................................................ 21,291

1997................................................................................................ 16,223

1998................................................................................................ 9,773

1999................................................................................................ 4,690

2000 and thereafter............................................................... 5,829

$85,194

As of June 30, 1994, the Department of Transportation and Maryland Transportation Authority had
commitments of approximately $539,994,000 and $66,000,000, respectively, for construction of highway and mass
transit facilities. Approximately 63% of future expenditures related to the Department of Transportation
commitments are expected to be reimbursed from proceeds of approved Federal grants when the actual costs are
incurred The remaining portion will be funded by other financial resources of the Department.

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