ARTHUR ANDERSEN LLP

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Honorable William D. Schaefer,
Comptroller of the Treasury of Maryland:

We have audited the accompanying general purpose financial statements of the State of Maryland as of June
30,1999, and for the year then ended, as listed in the table of contents. These general purpose financial statements
are the responsibility of the State of Maryland's management. Our responsibility is to express an opinion on these gen-
eral purpose financial statements based on our audit. We did not audit the financial statements of (1) Maryland
Water Quality Financing Administration; (2) Maryland State Lottery Agency; (3) State Use Industries; (4)
Maryland Local Government Investment Pool; (5) State Retirement and Pension System of Maryland; (6) Maryland
Stadium Authority; (7) Maryland Food Center Authority and (8) Maryland Environmental Service, which represent the
percentages of the total assets, operating revenues or additions, and expenditures, expenses or deductions of
the fund types listed below.

	Percentage	of Total Fund	Type
		Operating	Expenditures,
		Revenues or	Expenses
Agency	Total Assets	Additions	or Deductions
Enterprise Fund	22.4%	85.0%	76.1%
— Maryland Water Quality Financing Administration
— Maryland State Lottery Agency
— State Use Industries
Investment and Pension Trust Funds	99.8%	99.5%	99.2%
— Maryland Local Government Investment Pool
— State Retirement and Pension System of Maryland
Component Unit Proprietary Fund	94.8%	99.7%	99.8%
— Maryland Stadium Authority
— Maryland Food Center Authority
— Maryland Environmental Service

Those financial statements were audited by other auditors whose reports thereon have been furnished to us,
and our opinion, insofar as it relates to the amounts included for the above mentioned agencies and component
units, is based solely on the reports of other auditors.

We conducted our audit in accordance with generally accepted auditing standards and the standards for
financial audits contained in Government Auditing Standards (1994 Revision), issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the general purpose financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall general purpose financial statement presentation. We believe that our audit and the
reports of other auditors provide a reasonable basis for our opinion.

25