guarantee that requires the Governor to include in the States budget the amount of any shortfall of the Trust's assets to pay
current contract liabilities.

Complete financial statements of the individual component units and the Local Government Investment Pool may be requested
from the Comptroller of the Treasury of the State of Maryland, LLG Treasury Building, Annapolis, Maryland 21404.

B. Fund Accounting:

The State uses funds, account groups and component units to report its financial position and results of operations. Fund
accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to
certain functions or activities. Funds are separate accounting entities, each with a self-balancing set of accounts which represent the
fund's assets, liabilities, equity (deficit), revenues and expenditures or expenses. There are three categories of "fund types":
governmental, proprietary and fiduciary.

GOVERNMENTAL FUND TYPES

Transactions related to the acquisition and use of the governments expendable financial resources received and used for those
services traditionally provided by governments are accounted for in governmental funds. The governmental fund measurement focus
is the flow of current financial resources and financial position (sources, uses and balances). Governmental funds include the
following:

General Fund:

Transactions related to resources obtained and used for those services traditionally provided by a state government, which are not
accounted for in other governmental funds, are accounted for in the general fund. These services include, among other items, general
government, public safety and judicial, health and mental hygiene, human resources and education (other than higher education
institutions). Resources obtained from federal grants and used for activities accounted for in the general fund, consistent with
applicable legal requirements, are recorded in the general fund.

Special Revenue Funds:

Transactions related to resources obtained, the uses of which are restricted for specific purposes, are accounted for in the special
revenue funds. The special revenue funds account for resources used for operations (other than debt service and pension activities)
of the Maryland Department of Transportation and the Maryland Transportation Authority, including construction or improvement
of transportation facilities and mass transit operations.

Debt Service Funds:

Transactions related to resources obtained and used for the payment of interest and principal on general long-term debt
obligations, transportation debt and Maryland Transportation Authority debt are accounted for in the debt service funds.

Capital Projects Fund:

Transactions related to resources obtained and used for the acquisition, construction or improvement of certain capital facilities,
including those provided to political subdivisions and other public organizations, are accounted for in the capital projects fund. Such
resources are derived principally from proceeds of general obligation bond issues, federal grants and operating transfers from the
State's general fund. The State enters into long-term contracts for construction of major capital projects and records the related
commitments as encumbrances.

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, Business and Economic Development and Environment.

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.

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