PROPRIETARY FUND TYPE
Enterprise Funds:

Transactions related to commercial types of activities operated by the State are accounted for in the enterprise funds.
The proprietary fund types differ from governmental fund types in that the focus is on the flow of economic resources
which, together with the maintenance of equity, is an important financial indicator. The enterprise funds include:

1. Economic Development, which consists of direct loan and loan insurance programs of the Maryland
Departments of Housing and Community Development and Business and Economic Development.

2. Maryland State Lottery Agency, which operates the State Lottery.

3. State Use Industries, which utilizes inmate labor from State correctional institutions to manufacture goods,
wares and merchandise to be sold to State agencies, political subdivisions and charitable, civic, educational,
fraternal or religious associations or institutions.

FIDUCIARY FUND TYPES

Transactions related to assets held by the State in a trustee or agency capacity are accounted for in fiduciary
fund types. Fiduciary fund types include the following:

1. The expendable trust fund, which reflects the transactions, assets, liabilities and fund equity of the
Unemployment Insurance Program and the Deferred Compensation Plan and is accounted for on a flow of
current financial resources measurement focus. The Unemployment Insurance Program is used to account
for the unemployment taxes collected from employers, federal revenue received and remittance of benefits
to the unemployed. The Deferred Compensation Plan accounts for participant earnings deferred in accordance
with Internal Revenue Code Sections 457, 403(b), and 401(k). Amounts deferred are invested through an
independent agent and are not subject to federal income taxes until paid to participants upon termination
or retirement from employment, death or for an unforeseeable emergency.

2. The investment trust fund which reflects the transactions, assets, liabilities and fund equities of the Maryland
Local Government Investment Pool (Pool) and is accounted for using the flow of economic resources
measurement focus. In prior years, the financial activities of the Pool were recorded in an agency fund.
Effective July 1,1998, the financial activities were recorded as an investment trust fund. As a result of this
change, net assets in the amount of $590,352,000 were recorded. The change in classification was made to
more properly reflect the financial activities of the Pool.

3. The State Retirement and Pension System of Maryland and the Mass Transit Administration Pension Plan,
which reflect the transactions, assets, liabilities and fund equities of the retirement and pension plans
administered by the State and the Mass Transit Administration and are accounted for using the flow of
economic resources measurement focus.

4. The agency funds, which are custodial in nature and do not present the results of operations or have a
measurement focus. The State uses agency funds to account for the receipt and disbursement of patient and
prisoner accounts, the amounts the State invests for political subdivisions on a pooled basis, various taxes
collected by the State for distribution to the Federal government and political subdivisions and amounts
withheld from employees' payroll.

ACCOUNT GROUPS

Account groups are used to establish accounting control and accountability for the State's general fixed assets
and the unmatured principal of its general long-term debt and other long-term obligations of governmental fund
types. General fixed assets do not represent financial resources available for appropriation and expenditure, nor
does the unmatured principal of general long-term obligations require current appropriation and expenditure of
governmental fund financial resources.

General Fixed Assets Account Group:

General fixed assets acquired, leased under capital lease agreements or constructed for use by the State in the
conduct of its activities, other than activities accounted for in enterprise funds and the discretely presented component
units (proprietary funds and higher education), are reflected in the general fixed assets account group when acquired.
These fixed assets are stated at cost or estimated historical cost. Donated fixed assets are recorded at their fair value

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