Summary of Significant Accounting Policies:

As a part of the Pension Trust Fund, the accounts of both the System and the Plan, including benefits and refunds, are maintained
using the accrual basis of accounting. Fair value of the investments is determined by the State Retirement and Pension System of
Maryland based on published securities data.

Quotations from national security exchanges and security pricing services, or by respective fund managers for securities which
are not actively traded. Other investments are valued based on appraisals or the present value of the projected future income.

Post Retirement Benefits:

The State also provides, in accordance with State Merit System Laws, post employment 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 post employment health care benefits, which is based on health care insurance charges for current employees. During
fiscal year 2000, these benefits paid amounted to $84,475,000. Costs are recognized as they are paid.There are 35,382 participants
currently eligible to receive benefits.

16. Deferred Compensation Plan (Plan):

The State offers its employees a deferred compensation plan (Plan) created in accordance with Internal Revenue Code Sections
457, 403(b), 401(a) and 401(k). The Plan, available to eligible State employees, permits participants 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. State law provides that the Governor appoint the nine member Board
of Trustees of the State's Supplemental Retirement Systems. The Board is responsible for the implementation, maintenance and
administration of the Plan.

The State of Maryland Match Plan and Trust was established by the State on July 1,1999. The plan is designed to be a tax-
qualified 401(a) defined contribution matching plan under Internal Revenue Code section 401(a). Under plan provisions, the State
contributes to each participant's account an amount equal to each participant's contributions to the State's Supplemental Retirement
Plans during the same plan year. For each fiscal year of the State beginning after June 30,1999, the maximum amount contributed
to this plan for each participant is $600. A participant may receive more than $600 in matching contributions during a plan year, but
may not exceed the maximum $600 contribution for any State fiscal year. An employee's interest in his/her account is fully vested at
all times. The State's contribution for the six months ending December 31,1999, was $14,547,000.

17. 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 2000 were approximately $44,031,000. Future
lease commitments under these agreements as of June 30,2000, are as follows (amounts expressed in thousands).

Years ending June 30, Amounts

2001...................................................................... $ 38,475

2002...................................................................... 33,327

2003...................................................................... 26,951

2004...................................................................... 21,175

2005...................................................................... 17,509

2006 and thereafter............................................... 49,502

$186,939

As of June 30,2000, the State had commitments of approximately $166,186,000 for the completion of projects under construction.

As of June 30, 2000, the Department of Transportation and Maryland Transportation Authority had commitments of
approximately $1,556,113,000 and $57,000,00 respectively, for construction of highway and mass transit facilities.

Approximately 45% 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 of Transportation.

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