Accrued Self-Insurance Costs:

The accrued self-insurance costs represent the State s liability for its various self-insurance programs. The State is self-insured for
general liability, property and casualty, workers' compensation, environmental and anti-trust liabilities and certain employee health
benefits. The State records self-insurance expenses in the proprietary and discretely presented component unit fund types on an
accrual basis and the modified accrual basis for the governmental fund types. The long-term accrued self-insurance costs of the
governmental fund types which are not expected to be funded with current resources are reported in the general long-term debt
account group.

Annual Leave Costs:

Principally all full-time employees accrue annual leave based on the number of years employed up to a maximum of 25 days per
calendar year. Earned annual leave may be accumulated up to a maximum of 50 days as of the end of each calendar year. Accumulated
earned but unused annual leave for general government employees is accounted for in the general long-term debt account group.
Liabilities for accumulated earned but unused annual leave applicable to enterprise funds and the proprietary and higher education
component units are reported in the respective funds.

Interfund Transactions:

The State has the following types of transactions among funds:

Statutory transfers (Operating Transfers)—Legally required transfers that are reported when incurred as "Operating transfers in"
by the recipient fund and as "Operating transfers out" by the disbursing fund. Legally required transfers between primary government
and component unit organizations are reported when incurred as "Operating transfers in from component unit" by the recipient
organization and "Operating transfers out to primary government" or "Operating transfers out to component unit" by the disbursing
fund and "Operating transfers in from primary government."

Transfers of Expenditures (Reimbursements)—Reimbursement of expenditures made by one fund for another that are recorded
as expenditures in the reimbursing fund and as a reduction of expenditures in the reimbursement fund.

Interfund Payments (Quasi-external Transactions)—Charges or collections for services rendered by one fund to another that are
recorded as revenues of the recipient fund and as expenditures or expenses of the disbursing fund.

"Total Memorandum Only1 Columns:

The "Total Memorandum Only" columns represent an aggregation of the individual combined financial statements for the
primary government and the reporting entity, and do not represent consolidated financial information.

New Pronouncements:

In December, 1998, GASB issued Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. The
State is in the process of assessing the impact of this Statement and will implement it as of the effective date for the fiscal period
beginning after June 15, 2000. In addition, in June 1999, GASB issued Statement No. 34, Basic Financial Statements - and
Management's Discussion and Analysis - for State and Local Governments. The Statement establishes financial reporting standards
for state and local governments. It establishes that the basic financial statements and required supplementary information for general
purpose governments should consist of managements discussion and analysis, basic financial statements, including government -
wide financial statements, fund financial statements and notes to the financial statements, and required supplementary information.
The State is in the process of assessing the impact of this Statement and will implement it as of the effective date for the fiscal period
beginning after June 15, 2001.

B. Governmental Fund Types, Expendable Trust and Agency Funds:

Basis of Accounting:

The accounts of the general, special revenue, debt service, capital projects, expendable trust and agency funds are maintained and
reported using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues susceptible to
accrual are recognized in the financial statements when they are both measurable and available to finance operations during the
fiscal year or liquidate liabilities existing at the end of the fiscal year. Material revenues susceptible to accrual include: federal grants,
personal income taxes, sales and use taxes, and motor vehicle fuel and excise taxes. Expenditures are recognized when obligations are
incurred as a result of receipt of goods and services. Encumbrances represented by executed and unperformed purchase orders and
contracts, which are approved by the Department of Budget and Management, are recorded as reservations of fund balance as of the
end of the fiscal year.

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