MarylandState Treasurer’s 0 2010 ANNUAL REPORT 0

INVESTING FOR MARYLAND’S FUTURE

Maryland State Treasurer’s 2010 ANNUAL REPORT

TABLE OF CONTENTS

Biography of the Honorable Nancy K. Kopp, Treasurer of Maryland 2

Maryland State Treasurer’s Office, Historical Review 3

Maryland State Treasurers of the Past 4

Maryland’s Board of Public Works 5

Schedule of Selected Financial Data 7

Executive Division 8

Administration Division 11

Banking Services Division 15

Debt Management Division 18

Information Technology Division 23

Insurance Division 27

Investment Division 31

Legal Division 35

Appendix A – Investment Inventory 38

Acknowledgements 47

1 Maryland State Treasurer’s 2010 ANNUAL REPORT

BIOGRAPHY OF THE HONORABLE NANCY K. KOPP

Elected in February 2002, and re-elected to and Economic Development. She also served on full four-year terms in 2003 and 2007, Nancy the Capital Budget Subcommittee, Subcommit- K. Kopp is the 23rd Maryland State Treasurer tee on Pensions, and Joint Committee on Budget since the adoption of the Constitution of 1851. and Audits, and at various times as Deputy Ma- She is the second woman ever to serve as Mary- jority Leader and Speaker Pro Tem. During her land’s State Treasurer and is the only woman legislative career, Treasurer Kopp was named by serving Maryland in a Constitutional Office. In her colleagues as the most effective woman legis- addition to her responsibilities for managing the lator and one of the 10 most effective members Office of State Treasurer and representing the of the House. General Assembly, the Treasurer holds positions of leadership on a number of key State financial Treasurer Kopp has been active in numerous planning committees. national, regional and State organizations and Nancy K. Kopp boards over the years, primarily focused on State Treasurer Treasurer Kopp chairs both the Capital Debt finance, budgeting and education. Appointed Affordability Committee and the Commission on by President Clinton to the National Assessment State Debt, and sits on Maryland’s three-mem- Governing Board, which oversees the National ber Board of Revenue Estimates. She is the chief Assessment of Educational Progress (the “Na- representative of the State dealing with financial tion’s Report Card”), Treasurer Kopp also rating agencies and investment banking firms. served as Treasurer of the Southern Regional The Treasurer also serves as Chair of the Board Education Board and chaired its Commission on of Trustees of the Maryland State Retirement Educational Quality. She served on the Executive and Pension Systems, as Chair of the College Committee of the National Conference of State Savings Plans of Maryland and as a member of Legislatures and chaired its Assembly on Legisla- the Maryland Supplemental Retirement Board, tive Issues, and Committees on Federal Budget the Maryland Health and Higher Education Issues, State Fiscal Issues and Capital Budgeting Financing Authority, the Maryland Agricultural Procedures. Treasurer Kopp also was Vice-Chair Land Preservation Foundation Board, the Small of the National Commission on State and Local Business Development Financing Authority Budget and Finance Procedures. She is a mem- and the Hall of Records Commission. Unique ber of the National Association of State Treasur- among the Treasurer’s responsibilities is her ers and President of the National Association of position on the Board of Public Works with the State Auditors, Comptrollers and Treasurers. Governor and the Comptroller of the State. This Board oversees a substantial portion of the A graduate of Wellesley College, Treasurer procurements and contracts of the State, ranging Kopp holds a master’s degree in Government from wetlands licenses to construction projects. from the University of Chicago. She also has received honorary doctorate degrees from Treasurer Kopp represented the Bethesda, Hood College, the University of Maryland at Maryland area in the Maryland House of Baltimore, the University of Maryland Uni- Delegates for 27 years prior to her election versity College and Towson University and as Treasurer. As a member of the House of is an Honorary Alumna of the University of Delegates, Treasurer Kopp chaired the Joint Maryland, College Park. She and her husband, Treasurer’s photograph by Chase Studios, Committee on Spending Affordability, as well as Robert Kopp, live in Bethesda and have two Bethesda, Maryland the Appropriations Subcommittee on Education adult children. State Treasurer’s Office

2 Maryland State Treasurer’s 2010 ANNUAL REPORT

HISTORICAL REVIEW

During the exploration and settlement period In addition to having authority over custody, of North America (1492-1607), European safeguarding, investment and disbursement of powers competed to settle the New World. State funds, the Maryland State Treasurer is England laid claim to large tracts of land along considered among the most powerful treasurers the East Coast and successfully colonized the in the country due to membership on the Board Chesapeake Bay area. England’s first official of Public Works, which reviews and approves all colony, settled in Jamestown, Virginia, in 1607 major State procurements. It is the Treasurer’s (the Jamestown Colony), included what we now job to brief members of the General Assembly know as Maryland. In 1632, King Charles I of on issues regarding the financial operation and England granted the Charter of Maryland to condition of the State. The Treasurer maintains Cecil Calvert. Calvert was granted extensive the State’s ongoing relationship with financial 0 autocratic powers over the Maryland colony. rating agencies and conducts outreach with …Sir Francis Nick- Among those powers was the right to appoint State agencies and other appropriate offices. elson appointed government officials. The Treasurer also produces this annual report Maryland’s first Soon after his appointment as Governor of in keeping with her statutory responsibility to two State Treasur- Maryland, Sir Francis Nickelson appointed provide the General Assembly with current infor- ers in 1694 … a Maryland’s first two State Treasurers in 1694. At mation regarding the State’s financial condition. Treasurer for the that time, there were two Treasurers appointed Eastern Shore and for the State – a Treasurer for the Eastern Shore and a Treasurer for the Western Shore. Mary- a Treasurer for the land’s first Treasurers were Colonel William Western Shore. Whittington (Eastern Shore) and Captain Thom- as Tasker (Western Shore). The primary duty of 0 the State Treasurers at that time was to manage and disburse State funds. The Governor held the task of appointing State Treasurers throughout the 18th century. This responsibility was ultimate- ly transferred to the Legislature with the adoption of the Maryland Constitution in 1776.

In 1843, the two-Treasurer system was abolished with the duties of the Eastern Shore Treasurer being assumed by the Treasurer of the Western Shore. The Maryland Constitution of 1851 finally established a single office of Treasurer for the entire State to be elected by joint ballot of both houses of the General Assembly. Histori- cally, the Treasurer’s position was appointed for a term of two years as a part-time position. In 1922, the Treasurer’s term was extended from two years to four years and became a full-time position in 1973.

3 Maryland State Treasurer’s 2010 ANNUAL REPORT

TREASURERS OF THE PAST

Treasurers of the Eastern Shore Treasurers of the Western Shore 1694-1695 Col. William Whittington 1695-1698 Robert Mason 1695-1714 Maj. Thomas Smithson 1699-1700 Robert Mason 1714-1727 Robert Ungle 1700-1736 Col. Samuel Young 1727-1747 Col. James Hollyday 1736-1772 Col. Charles Hammond 1747-1766 Col. Edward Lloyd 1772-1775 Col. William Fitzhugh 1766 John Leeds 1775-1804 Thomas Harwood, Jr. 1766-1769 Bedingfield Hands 1804-1826 Benjamin Harwood 1769-1775 William Hemsley, Jr. 1826-1843 George MacKubin 1775-1777 William Hindman 1843-1844 James Owens 1777-1778 James Hindman 1844-1852 Dennis Claude 1778-1779 Edward Hindman 1852-1854 James Owens 1779-1789 Henry Dickinson 1854-1860 Dennis Claude 1789-1802 William Richardson 1802-1813 William Chambers 1813-1825 William Richardson Maryland State Treasurers 1825-1826 John K.B. Emory (Beginning of single-Treasurer system) 1826-1840 William K. Lambdin 1840-1841 Perry Robinson 1860-1862 Sprigg Harwood 1841-1842 John H. Harris 1862-1870 Robert Fowler 1842-1843 Perry Robinson 1870-1872 John Merryman 1694-1695 Capt. Thomas Tasker 1872-1874 John W. Davis 1874-1885 Barnes Compton 1885-1886 John Gittings 1886-1890 Stevenson Archer 1890-1892 Edwin Brown 1892-1896 Spencer C. Jones 1896-1900 Thomas J. Shryock 1900-1916 Murray Vandiver 1916-1918 John M. Dennis 1918-1920 William P. Jackson 1920-1935 John M. Dennis 1935-1963 Hooper S. Miles 1963-1973 John A. Luetkemeyer 1973-1975 J. Millard Tawes 1975-1987 William S. James 1987-1996 Lucille D. Maurer 1996-2002 Richard N. Dixon 2002-Present Nancy K.Kopp

4 Maryland State Treasurer’s 2010 ANNUAL REPORT

MARYLAND’S BOARD OF PUBLIC WORKS

As the State’s ultimate policy-making and over- Some contracts, property acquisitions and 0 sight board for State procurements, the Mary- wetlands licenses can be contentious, creating a land Board of Public Works is an entity with situation whereby the meeting takes on the tone On any given wide-ranging jurisdiction over nearly every facet of a hearing, with testimony from both propo- agenda, every of State government. It comprises the Governor, nents and opponents. While members normally other Wednesday the Treasurer and the Comptroller. vote on all issues on the agenda before it, the in the Governor’s Board sometimes decides to defer an item for Reception Room On any given agenda, every other Wednesday further study. in the Governor’s Reception Room in the State in the State House House, the Board might review and approve The Board is also responsible for cutting the the Board might 80 to 100-plus procurements, which also may State’s current year budget to ensure that it review and include land acquisitions and easements, space remains balanced even in times of reduced approve 80 leases for State agencies, wastewater grants, revenue. An overriding theme for the Board of ground leases, purchase of Video Lottery Public Works during the past 12 months has to 100-plus Terminals (VLTs), information technology been the State’s fiscal condition resulting from procurements… contracts, architectural/engineering contracts the national recession. The Board cut $282 mil- for new construction and renovation at universi- lion in July 2009, $454 million in August 2009 0 ties, sales of General Obligation bonds, energy and $364 million in November 2009—for a total performance contracts and wetlands licenses. of $1.1 billion.

For the fiscal year 2010, beginning July 1, 2009 As might be expected, the meetings at which and ending June 30, 2010, the Board acted on cuts were made were dominated by discus- 1,929 transactions totaling $6,057,741,129.54. sion and questions by Board members about the proposed reductions, presentations by the The Board of Public Works, the only constitu- Governor’s cabinet secretaries and public input. tionally mandated government body of its type One particular reduction, resulting in the closing in the nation, provides a public setting for an of the Upper Shore Mental Health Center in open, well-publicized review of procurement Chestertown, drew considerable attention at actions. The result is enhanced transparency and a few Board meetings and disagreement from accountability. In many states, such decisions are the community. made within executive departments and agencies, away from public scrutiny. Acquisition of Video Lottery Terminals (VLTs), commonly known as slots, also drew much The goal of this public review is to ensure that discussion at Board meetings, as the State moved the procurement process, one sometimes entail- toward the October 2010 opening of the first ing large, expensive contracts with five to 15- casino in Perryville, Cecil County. Maryland is year terms, is fair, open, honest and competitive. one of the few states in which the State govern- The procurement process is intended to produce ment is legally required to purchase or lease the the delivery of projects and services in a cost-ef- gaming machines, as opposed to authorizing the fective manner. Board decisions often can hinge operators to lease or purchase the equipment. on complicated policy and legal considerations; the process of review, discussion and approval can The Treasurer’s participation on the Board ensures seem tedious. It ensures intense scrutiny. that the General Assembly has a voice throughout

Continued on page 6

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Public Works continued from page 5

the year in the post-appropriations management F Approval of a ground lease for a new Na- of public funds. tional Sailing Hall of Fame Museum on the waterfront in Annapolis During the past fiscal year, the following issues, F $12 million acquisition of the former Wash- in addition to the budget cuts and VLTs, were ington Post printing plant in College Park for among many that came before the Board of use by the University of Maryland, College Public Works and generated much discussion: Park in revitalization of Route 1 F Naming of the Choptank River Fishing Pier F Namings of three Department of Natural in Cambridge for Bill Burton, a well-known Resources (DNR) facilities in the western, sportsman and outdoor-living writer southern and eastern parts of the State F Sale of $485 million in General Obligation for Gary Yoder, Tom Wisner and Julie bonds, including the sale of more than $235 Schweikert million in retail bonds sold to Marylanders F Approval of the State property tax for 2011 F The sale of refunding bonds, resulting in the at 11.2 cents per $100 of the full value of saving of several million dollars in interest real property (other than utilities) and 28 payments cents per $100 of the full assessed value on operating real property of public utilities F $43 million information technology contract for the Department of Transportation F Nearly $264 million for new and renovated school construction F $3.1 million Program Open Space acquisi- tion of 1,043 acres in Dorchester County F $2.1 million acquisition of a portion of Mt. Ararat Farms overlooking Susquehanna F $3,350,000 million contract for new video River in Cecil County boards at M&T Bank Stadium in Baltimore F Presentation of superior maintenance The Constitutional Convention of 1864 created awards to elementary schools in Allegany, the Board of Public Works based on predeces- Anne Arundel, Baltimore, Calvert, Cecil, sor boards dating back to 1825. In the mid-19th 0 Frederick, Garrett, Howard and Montgom- century, the Board mainly oversaw public work The Constitutional ery counties activities such as railroads, canals and bridge Convention of 1864 F $2 million contract to conduct a statewide companies in which the State had an interest created the Board disparity study for the Department of as a stockholder or creditor. Over the years, the Board’s duties have expanded as the legislature of Public Works Transportation has increased this unique organization’s respon- F Approval of a 50-year public-private part- based on prede- sibilities and autonomy. cessor boards dat- nership (P3) lease for the operation of the Maryland Port Administration’s Seagirt ing back to 1825. Maryland’s Governor has extraordinarily strong Terminal and Canton Property by Ports fiscal powers. The Board of Public Works pro- America Chesapeake, enabling construction vides a valuable check on executive fiscal actions. 0 of a 50-foot deep berth at Seagirt F Declaration of surplus of 178 acres at the Rosewood Center in Owings Mills in Balti- more County for potential sale to Stevenson University

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SCHEDULE OF SELECTED FINANCIAL DATA

Collateral Balances as of June 30, 2010 Bank...... $518,911,838 Insurance ...... $115,195,741

Total Investment Portfolio Composition as of June 30, 2010 Repurchase Agreements...... $2,042,846,936 U.S. Treasuries...... $895,000 U.S. Government Agencies...... $2,788,898,000 Other Investments...... $278,665,439 Total Portfolio...... $5,111,305,375

Securities Lending Program Activity for the 2010 Fiscal Year Gross Income...... $201,687 Net Income...... $151,266

General Obligation Debt Activity for the 2010 Fiscal Year Tax Exempt General Obligation Bond Issuances...... $1,938,963,000 Interest Payments...... $292,878,000 Principal Payments...... $484,645,000

Local Government Investment Pool Fund Balance as of June 30, 2010...... $2,795,956,554

State Insurance Trust Fund Balance as of June 30, 2010 Beginning Balance...... $31,284,729 Transfers In...... $14,380,537 Transfers Out...... $(14,064,651) Less Operating Transfer to General Fund...... $(5,221,332) Ending Balance...... $26,379,283

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EXECUTIVE DIVISION

The Executive Division coordinates legislation F BERNADETTE T. BENIK within the Maryland State Treasurer’s Office, 0 Chief Deputy Treasurer reviewing bills, preparing fiscal notes and writ- The Executive [email protected] ten testimony and following the course of bills Division provides through the legislative process. The Division is F HOWARD FREEDLANDER responsible for coordinating any draft legislation direct support to Deputy Treasurer for External Affairs to be introduced to the General Assembly with the Treasurer in [email protected] the Legal and Division Directors of the State the execution of Treasurer’s Office. Each proposed bill requires F her wide-ranging MELISSA MOYE extensive preparation including a determination Deputy Treasurer for Financial Policy Constitutional of the fiscal and economic impact to the Office, [email protected] the State and private industry. responsibilities. 0 Chief Deputy Treasurer The Executive Division provides direct support The Chief Deputy Treasurer coordinates and to the Treasurer in the execution of her wide- leads the operations of the State Treasurer’s ranging Constitutional responsibilities. The State Office, including the Banking Services, Debt Treasurer is responsible for receiving, depositing, Management, Insurance, Investment, Infor- investing and distributing State funds, anticipating mation Technology and Administration Divi- the monetary needs of the State and, on behalf of sions. The Chief Deputy Treasurer advises the Board of Public Works, conducting bond sales the Treasurer on matters regarding legislative twice a year to ensure the State’s financial ability to policy, planning, new technologies and long- meet its fiscal obligations. The State Treasurer also term operational challenges, opportunities and provides lease-purchase financing of capital equip- strategies. Coordination of the State Treasurer’s ment for State agencies and handles insurance needs for State government. Continued on page 9

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Executive Division continued from page 8 operational functions with other agencies, such Also, the external affairs Deputy represents the as the Comptroller and the Department of Bud- Treasurer on the Maryland Higher Education get and Management, is another responsibility Committee when it prepares its State Plan for of the Chief Deputy Treasurer. Higher Education every four years. This posi- tion also entails participation on legislative task The Chief Deputy Treasurer works closely forces related to procurement, such as the Task with members of the General Assembly and its Force to Study the Procurement of Health and Standing Committees such as Senate Budget & Social Services. Taxation and House Appropriations regarding the Office’s budget. The Chief Deputy Trea- Additional duties include serving as the Of- surer also prepares reports and updates of the fice’s public information officer, preparing news Office’s progress throughout the year for the releases, responding to media inquiries, respond- Statutory Committees of the House and Senate. ing to queries sent to the Office’s website and These Committees include Spending Afford- writing speeches. ability, Joint Committee on the Management of Public Funds, Legislative Policy Committee and Deputy Treasurer for the Joint Audit Committee; as well as serving as Financial Policy the Treasurer’s designee on task forces, com- The Deputy Treasurer for Financial Policy provides missions and other committees of the General analysis and advice to the Treasurer in the areas of Assembly as required. economics and finance, including the development Deputy Treasurer for of best practices in retirement and other benefit financing, business development and analysis of External Affairs regional and macroeconomic trends in financial The Deputy Treasurer for External Affairs markets. Analyses of investment portfolio hold- serves as the Treasurer’s primary liaison/adviser ings are completed regularly. The Deputy Trea- to the Board of Public Works (BPW), conduct- surer for Financial Policy also analyzes and advises ing extensive research (including site visits), on emerging financial issues, such as clean energy preparing detailed analyses for the Treasurer investing, regional economics and macroeconomics, for the bi-weekly meetings, and working closely short- and long-term development in the financial with the Treasurer’s counsel, representatives of markets and financial literacy and access. the Governor’s, Comptroller’s and the Board of Public Works offices and State agency secretar- The Deputy Treasurer for Financial Policy ies. As part of the BPW preparation process, the supports the Treasurer in her service on State Deputy serves as the primary Legislative Liaison boards and commissions, such as the State operating a constituent outreach program, and Retirement and Pension System Board, and sending numerous email notifications to State Supplemental Retirement Plans Board and their legislators about upcoming Board actions in investment-related committees, the General their districts, as well as the final decisions. Assembly’s Blue Ribbon Commission to Study Health Care Funding (OPEB) and related issues, The Deputy represents the Treasurer as a voting the Maryland College Savings Plan Board and designee on the Procurement Advisory Coun- the Small Business Development Financing cil, the State Retirement and Pension System’s Authority. The Deputy Treasurer for Financial administrative committee, the Maryland Agricul- Policy also represents the Treasurer at finance- tural Land Preservation Foundation’s Board of related public events, as required, and on the Trustees and the Hall of Records Commission. Financial Literacy Task Force. Continued on page 10

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Executive Division continued from page 9 Internal Audit The Internal Auditor plans, controls, directs and implements a comprehensive annual audit designed to evaluate internal controls, add value, improve operations and minimize risk at the State Treasurer’s Office. The Auditor reviews programs, operations, and conducts special projects in accordance with generally accepted auditing standards and all legal statutory re- quirements. The Auditor helps safeguard assets by ensuring that the mission, objectives, and key goals of the Office are carried out. The Auditor directs systematic, periodic examinations of the accounts and records of the State Treasurer’s Office to provide assurance that appropriate policies and procedures are in place and func- tioning as intended.

The Internal Auditor also serves as the focal point for all financial, productivity, and compli- ance audit activities and is the liaison between the State Treasurer’s Office and the external auditors, legislative auditors, and federal auditors. The Internal Auditor is responsible for coordinat- ing the response to all audit findings. The Audi- tor evaluates and monitors the corrective action plans taken to ensure that they are sufficient to resolve the findings. The Internal Auditor also reviews potential problem areas to prevent future audit deficiencies.

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ADMINISTRATION DIVISION

State agencies and departments. Accounting 0 F JESSICA PAPALEONTI collects insurance premiums and agency deduct- Director of Budget Management ibles from all State agencies to fund the State The primary & Accounting Insurance Trust Fund (SITF) and to cover the function of the [email protected] purchase of agency-specific insurance policies. Administration The Unit also handles all disbursements out of Division is to the SITF in the form of agency reimbursements The primary function of the Administration and settlement payments to claimants as re- supply efficient Division is to supply efficient daily operational quested by the Insurance Division or the Board daily operational and support services to the State Treasurer’s Of- of Public Works. Finally, working collaborative- and support ser- fice. The Division comprises four Units: Budget ly with the Banking Services Division, this Unit vices to the State Management and Accounting, Human Resourc- processed approximately 1,500 agency requests Treasurer’s Office. es, Procurement and Office Administration. for check reissues, stop payments and recoveries from the State’s Unpresented and Undeliverable 0 Budget Management and check funds. Accounting The Budget Management and Accounting Unit The general accounting functions of the Unit performs all of the budgeting and accounting include processing vendor invoice disbursements, functions essential to the daily operation and cash receipt deposits, bi-weekly payroll process- management of the Sate Treasurer’s Office. ing, maintenance of all financial records, fund This Unit is responsible for the development, balance reconciliations, preparation of year- justification and execution of the Office’s annual end closing records and the development and budget, which totaled $35.9 million in Fiscal implementation of all accounting controls and Year 2010. As part of the annual budget pro- procedures. In addition, this Unit is responsible cess, the Unit also calculates and provides State for managing the general office supply invento- Insurance Trust Fund annual premiums for all ries on behalf of the agency, including providing State agencies to the Department of Budget and centralized ordering and tracking of supplies, Management to be included in their statewide ensuring cost efficient purchasing, and providing annual budget instructions. In addition to oversight over supply requests as they relate to managing the general accounting and budgeting necessity and budget availability. functions for the agency, this Unit is also respon- This Unit is also responsible for the development, sible for several essential functions on behalf of justification and execution of the Office’s annual the State. budget which includes funding for agency opera- In Fiscal Year 2010, this Unit processed State tions as well as funding for costs of issuance and debt principal and interest payments totaling general advisory fees related to bond sales, and $786 million out of the Annuity Bond Fund and insurance costs related to statewide commercial $36 million in quarterly payments and agency premiums and the State Insurance Trust Fund. recoveries related to the Master Lease programs. Activity in these funds is monitored monthly to In addition, this Unit processed the annual analyze trends and ensure proper coding in premium totaling $67 million for the Injured accordance with their appropriations. The Unit Workers’ Insurance Fund (IWIF) and related works closely with the Insurance and Debt Man- transfers of these assessments from over 150 agement Divisions to review current activity and Continued on page 12

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Administration Division continued from page 11 future projections to ensure that expenditures The HR Unit has started sending performance remain in line with appropriations and to moni- standards “back to school to get ‘SMART.’” tor related cash balances. With technology ever-changing, HR is taking a fresh look at the standards used in position de- Human Resources scriptions to measure employee performance and The State Personnel Management System helping supervisors revise those standards to keep (SPMS) is a highly complex structure that deals them Specific, Measurable, Attainable, Realistic, with over 60,000 State employees. However, and Timebound so that the standards have practi- in the world of State personnel, it is easy to get cal meaning to the employees. sidetracked in a structure that deals with defini- From the first day new employees begin employ- tions, concepts and positions, and lose sight ment with the Office, they are directed to HR of that which brings it all to life. The Human for orientation. HR has focused its Orientation Resources (HR) Unit pulls together the man- Program this year to cover statewide and Of- agement of the 61 positions within the Office, fice policies, and ADA and EEO laws, identify including the people who fill those positions, in a agency officers in the HR Unit, and disseminate way that brings synergistic results for the agency. all required paperwork for new employees to Personnel management begins with a successful sign. As employees continue their tenure at the recruitment that requires many key elements in Office, training and performance management order to ensure equal opportunity and selection provide pathways for them to pursue career of the best candidate: this doesn’t happen just development, and the HR Unit assists with tools 0 by chance. Workforce planning results in having and resources to provide further opportunities for the right number of people, with the right skills, all those seeking career development. The HR From benefits competencies and experience, in the right jobs Unit has also implemented agency-wide train- ing programs such as the Driver Improvement administration, at the right time. Several years ago, the HR Unit took part in a steering committee to set up Program and an enhanced Supervisor Training to personnel statewide guidelines for workforce planning, and module. The HR Unit also guides employees database man- this year the Maryland State Treasurer’s Office and supervisors through employee assistance and agement, to has been one of the first agencies to forge ahead, employee relations pathways when appropriate. leave accounting, with the assistance of the Department of Budget From benefits administration, to personnel data- to travel manage- and Management, to publish a detailed, agency- base management, to leave accounting, to travel management, the HR Unit ensures that each ment, the Unit specific workforce plan. By being proactive in this way, the HR Unit hopes to avoid staffing employee’s needs are carefully met. The Unit ensures that each shortages in the future. Another key element is also responsible for coordinating and oversee- employee’s needs in excellent personnel management is hiring ing all issues and requests concerning salary and are carefully met. the best candidate for the job. Skilled service classification. recruitments follow a very specific set of laws An integral and necessary part of HR’s job is 0 and guidelines to ensure equal opportunity for ensuring compliance with regulations. We work all candidates. The HR Unit carries out these in a dynamic environment where, as the State laws by using a standardized matrix that allows continues to change, personnel must evolve. candidates to be measured and ranked objec- The HR Unit intends to interpret both statewide tively on their knowledge, skills and abilities, and Office policies, procedures and guidelines thus allowing each recruitment a standardized with clarity and compassion so that employees tool that ensures equal opportunity. can understand and make use of them without

Continued on page 13

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Administration Division continued from page 12 having to escalate issues to a higher level. HR F Insurance Division – 13 also serves as a resource for personnel records, F Investment Division – 2 employment verifications, and ethics/financial F disclosure compliance. Legal Division – 8 F TOTAL POSITIONS – 61 The HR Unit endeavors to provide safe work en- vironments in many ways. Even in an office set- Procurement ting, safety is key in keeping workplace accidents Section 12-107(b)(1) of the State Finance and from happening and encouraging ergonomic Procurement Article of the Annotated Code work areas to help reduce stress-related inju- of Maryland designates the Treasurer as the ries. This year the Unit has pursued the State’s primary procurement authority for all banking Wellness program by researching and providing and financial services, insurance and insurance resources and links for various services offered services. A wide range of financial services are through the State’s health benefits vendors. procured for the Office and other State agencies, Through service to others, Human Resources including banking services, financial advisors, best fulfills its goal, thus allowing the agency electronic bidding, underwriters, arbitrage rebate to accomplish its mission. For the Fiscal Year compliance consultants, lease financing firms, 2010, the State Treasurer’s Office maintained and broker services for insurance coverages. the following positions: In July 2009, on behalf of the Department of F Executive Division – 7 Human Resources, Child Support Enforcement Administration, the Office awarded a contract F Administration Division – 7 for general banking services to process and dis- F Banking Services Division – 14 burse monies collected on behalf of individuals F Debt Management Division – 3 who receive child support services. F Information Technology Division – 7 Continued on page 14

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Administration Division continued from page 13 Underwriting firms were awarded contracts in September 2009, to provide assistance to the Of- fice and its financing team in negotiating the sale and issuance of tax credit bonds, consisting of Qualified School Construction Bonds, Qualified Zone Academy Bonds and Qualified Energy Conservation Bonds. In October 2009, the Office procured escrow agent services, includ- ing paying agent services, for refunded State of Maryland General Obligation bonds.

On behalf of the United States Army Corps of Engineers and the Maryland Department of Natural Resources, the Office awarded a contract in March 2010 to a minority bank to serve as escrow agent for the Atlantic Coast of Maryland Shoreline Protection Project.

Due to financial market volatility, the Office determined to solicit new equipment lease financing bids every two months based on actual equipment lease financing needs of agencies of the State, rather than utilize a long-term Master Lease. Following approval of the Board of Public Works, the Office awarded contracts to several financial institutions for tax-exempt In August 2009, the Office solicited and received equipment lease financing beginning in October responses from financial institutions to par- and continuing thereafter every two months. In ticipate in the Linked Deposit program, which March 2010 an award for a taxable equipment was established with the intended purpose to lease-purchase financing was also done. In ad- stimulate opportunities for certified minority dition to the equipment financings, in January business enterprises by providing these busi- 2010 a contract was awarded for energy lease nesses with discounted interest rate loans from financing of certain energy systems or equip- participating financial institutions through the ment under energy performance contracts. Maryland Department of Housing and Com- munity Development.

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BANKING SERVICES DIVISION

F All other agency banking needs F GREGORY P. SABA Director In FY 2010 the Division assisted the Maryland [email protected] Transit Administration in obtaining banking services for the CharmCard® initiative that it recently launched. The BSD worked with the The Treasurer’s authority as the Constitutional University of Maryland Dental School and the Officer responsible for the deposit and disburse- Maryland Institute for Emergency Medical Ser- ment of State funds is found under Article VI, vices Systems to set up lockbox accounts to cre- Section 3 of the State Constitution and Titles 6 ate efficiencies in their check collection processes. and 7 of the State Finance and Procurement Ar- We also completed setup of an account struc- ticle of the Annotated Code of Maryland. ture for the Department of Health and Mental Hygiene’s Pharmacy Rebate Program. The Missions of the Banking new account structure will enhance DHMH’s Services Division tracking and reporting of an estimated $145 million in annual pharmacy rebates from drug The primary mission of Banking Services is to manufacturers. manage and control banking relationships for all banking needs for the State of Maryland and to Two primary responsibilities of the Banking Ser- anticipate agency needs and respond timely to vices Division of the Maryland State Treasurer’s agency requests. Office are the accurate and timely recordation of State funds, and the reconciliation of the The Banking Services Division (BSD) is directly State’s bank accounts to the State’s R*STARS responsible for procuring and managing the accounting system. The Division must account banking needs for all agencies of the State of for the receipt of all warranted deposits and the Maryland. This includes: disbursement of all warranted payments. The 0 Division’s comprehensive daily cash reconcilia- F Agency-specific depository accounts - Indi- tion allows the Treasurer’s Office to be proactive The Banking vidual depository accounts are maintained in identifying and solving agency banking issues. for all State agencies, and balances are Services Division As volume and transaction numbers increase, consolidated at the end of each day into the is directly respon- the processes and controls developed by the State’s main depository account. This allows sible for procuring Banking Division continue to result in a timely, for accurate agency-level transaction report- accurate, and completely documented reconcili- and managing ing with automatic concentration of funds ation of the State’s cash accounts. Maintaining the banking for cash management effectiveness. pace with changes in the banking environment needs for all F Disbursement accounts for vendor payments, also necessitates continual refinement of the agencies of payroll, and income tax refunds reconciliation processes and ensures maximum the State of F Lockbox services efficiency in the balancing of bank information Maryland. F Merchant account services (credit and debit and the R*STARS accounting system. card receipts) For FY 2010, total cash receipts and disburse- 0 F Agency working fund, trust, and escrow ments each exceeded $120 billion. The State’s accounts bank accounts are reconciled daily to the State’s

Continued on page 16

15 Maryland State Treasurer’s 2010 ANNUAL REPORT

Banking Services Division continued from page 15 TOTAL RECEIPTS AND DISBURSEMENTS FISCAL YEAR 2010 Beginning Cash Balance of Fiscal Year 2010 (1,205,763,524.23) 0 Receipts: Disbursements: The Banking July-09...... 9,290,475,901.34 July-09...... (10,302,464,430.11) Services Division August-09...... 10,045,998,373.42 August-09...... (8,895,871,031.53) September-09...... 8,931,020,179.61 performs daily op- September-09...... (10,069,490,848.56) October-09...... 10,047,265,874.93 October-09...... (8,983,794,201.41) erations functions November-09...... 10,045,740,400.48 November-09...... (10,823,180,576.40) on behalf of State December-09...... 11,985,193,524.32 December-09...... (11,307,426,920.56) agencies critical January-10...... 10,289,330,825.22 January-10...... (11,107,631,854.16) to the movement February-10...... 11,285,016,078.66 February-10...... (11,411,982,057.99) of funds into and March-10...... 11,919,445,087.32 March-10...... (11,596,471,684.02) out of the State’s April-10...... 11,192,125,488.33 April-10...... (10,618,552,760.15) bank accounts. May-10...... 8,593,245,589.94 May-10...... (10,002,685,104.78) 0 June-10...... 14,854,691,691.14 June-10...... (13,681,607,903.13) Total Receipts Fiscal Year 2010...... 128,479,549,014.71 Total Disbursements Fiscal Year 2010...... (128,801,159,372.80) Ending Cash Balance of Fiscal Year 2010 (1,527,373,882.32)

general ledger. In FY 2010 there were no un- In FY 2010, the BSD worked with the Maryland reconciled differences. Department of Disabilities to enable it to draw funds from a federal Medicaid Infrastructure On behalf of State agencies, the Banking Grant. The BSD has also continued its efforts Services Division performs daily operations to convert recurring vendor check payments functions that are critical to the movement of to electronic payments, increasing efficiencies funds into and out of the State’s bank accounts. in the disbursement process. In addition, the These include: BSD’s Deposit Products team continues to work F Processing the drawdown of funds from individually with agencies to ensure that the federal programs and grants general ledger posting of the electronic receipt of funds is automated to the extent possible. F Initiating FedWire payments F Initiating and managing foreign currency The Division ensures protection of State funds transactions on deposit through monitoring of account and F Processing check stop payments, cancel- collateral balances. lations, and reissues as well as requests for photocopies of paid checks Section §6-209 of the State Finance and Procurement Article (SFP) of the Annotated F Providing transaction research assistance to Code of Maryland requires that State money State agencies on deposit with financial institutions must have F Managing the Unpresented Check Fund and collateral pledged to the State that equals or ex- the Undeliverable Check Fund ceeds the amount on deposit not covered by the F Processing all bank adjustments Continued on page 17

16 Maryland State Treasurer’s 2010 ANNUAL REPORT

Banking Services Division continued from page 16 Federal Deposit Insurance Corporation. The will continue to explore new financial products collateral must be held by a third party custodian and improved data delivery methods that will and be of the types enumerated in §6-202 of SFP. increase its capabilities to provide efficient cost- The Banking Services Division monitors collat- saving banking services to the Maryland State eral for over 1200 depository, disbursement, and agencies in response to operating agency and registered agency working funds accounts, many taxpayer needs. In the current tenuous financial of which are used for trust and escrow account environment, the Division’s priority must be to services. Account balance and collateral data is enhance the ability to recover in the event of submitted monthly by financial institutions and a disaster and to change banks if required by custodians and is entered into an automated col- market conditions or the procurement process. lateral monitoring system. The data is analyzed In addition, the Division must anticipate the to ensure that the pledged collateral is sufficient future banking needs of the State to maintain its to cover the applicable bank balances. If the capacity to contain costs while accommodating collateral is insufficient, the financial institution is the growth, diversity, and complexity of banking required to increase the collateral. The collateral transactions. reported by the custodian must match the col- Some of the BSD’s efforts during FY 2010 lateral reported by the financial institution. included working with the accounting office of In FY 2010, the collateralization process for the the Department of Labor, Licensing and Regula- bank holding the State’s main disbursement, pay- tion to begin the use of BSD’s depository bank’s roll, and tax refund accounts as well as numer- remote deposit product, which resulted in sig- ous agency working fund accounts was moved nificant cost savings through the elimination of to a third party provider. This allows Banking their armored courier service. The BSD worked Services the capability to independently monitor closely with the University of Maryland at Balti- daily collateral and aggregate account balances more in its conversion of almost 80% of tuition held by that bank. refunds from checks to electronic payments. The BSD assisted Towson University in its implemen- The collateral balance for all State bank accounts tation of a costs saving tuition collection process at June 30, 2010, was $518,911,838. and has also been working with several other uni- versities to create efficiencies in their tuition and Banking Services serves as the State’s authority refund processing. The BSD actively works with for the development, control, and maintenance agencies to develop and strengthen their internal of statewide policies and procedures for banking processes and promote efficient banking services. products and services. It is the overall mission of the Banking Services Division The Division makes every effort to remain at to provide efficient, accurate, and timely banking services the forefront of the constant changes in bank- to all State agencies and external customers. ing products and services offered. The Division

17 Maryland State Treasurer’s 2010 ANNUAL REPORT

DEBT MANAGEMENT DIVISION

more frequently as it did in late 2009. The Debt F PATTI KONRAD Management Division, in conjunction with the Director State’s financial advisor, the Treasurer’s counsel, [email protected] and the State’s bond counsel, coordinates the sale and all activities prior to the actual sale, including liaison with the bond rating agencies, As a member of the Board of Public Works, the the preparation and publication of statutorily Treasurer has the lead role in the Board’s activ- required notices and advertisements, and the ity relating to the issuance and oversight of State preparation and distribution of Official State- debt. Under Article VI, Section 3, of the State ments. The preparation of Official Statements Constitution, the Treasurer is responsible for ar- is primarily performed in-house, resulting in ranging for the payment of principal and interest substantial savings to the State. on State debt. The State Treasurer’s Office monitors market General Obligation Bonds conditions and arranges the details of the actual General Obligation debt, which is backed by the sale, including the selection of the method of sale. pledge of the full faith and credit of the State, In competitive sales, which are held at a Board of finances State-owned capital improvements, Public Works meeting, bids are transmitted elec- such as prisons and colleges, and various State tronically by underwriting syndicates and verified capital grants to local governments and private by the Office. The winning bid is then ratified at non-profit organizations. Projects funded include the meeting. In negotiated sales, underwriters, local public schools, local jails, water treatment which are selected in a competitive procurement facilities, museums, rehabilitation of historic process, negotiate bond prices with the Office. structures, and private treatment centers for the Final pricing is incorporated in the Bond Pur- developmentally and physically disabled. chase Agreement which must also be approved at a Board of Public Works meeting. The State’s General Obligation bonds have been assigned the highest credit rating by Moody’s Finally, the State Treasurer’s Office supervises all Investors Service, Inc. (Aaa), Standard and activities of post-sale settlement, the investment of Poor’s (AAA) and Fitch Ratings, Inc. (AAA). the bond proceeds, compliance with Internal Rev- One of only eight states in the nation to hold a enue Service requirements for tax-exempt bonds, Triple-A credit rating from all three major credit continuing disclosure and payment of debt service. rating agencies, Maryland’s low interest rates are attributable to these superior ratings. General Obligation Bond Issues in Fiscal Year 2010 The Treasurer recommends the size, timing, There were six General Obligation bond sales and terms of sale of General Obligation bonds. in Fiscal Year 2010 totaling $1,939 million. The This entails periodic analysis and surveys to table on the following page summarizes the issues. determine the monthly cash balances of bond proceeds and project anticipated cash needs of Of particular note in Fiscal Year 2010 was the issu- State agencies and grantees for authorized capi- ance of bonds authorized by the American Recov- tal projects. In recent years, the State has held ery and Reinvestment Act of 2009 (ARRA). Build sales semi-annually although if there are op- America Bonds (BABs) are taxable bonds on which portune market conditions, the State may issue the State receives a 35% interest subsidy from Continued on page 19

18 Maryland State Treasurer’s 2010 ANNUAL REPORT

Debt Management Division continued from page 18 SUMMARY OF FISCAL YEAR 2010 ISSUES Series Dates of Sales Tax-Exempt Tax-Exempt Tax Credit Taxable Direct Overall Tax- Competitive Negotiated Subsidy Exempt TIC

New Money Issuances 2009 Second 07/31/2009 & $235.0 million 3.20% Series A 08/03/2009 2009 Second 08/05/2009 $200.0 million 2.92% Series B 2009 Second 08/05/2009 $50.0 million 3.02% Series C BAB 2009 Third 10/21/2009 $141.8 million 2.85% Series A 2009 Third 0 10/21/2009 $58.2 million 3.06% Series B BAB By refunding prior 2009 QZAB 12/7/2009 $ 5.6 million (a) series of bonds 2009 QSCB 12/8/2009 $50.3 million .04% (b) and using the 2010 First 2/24/2010 $400.0 million 2.85% Series A BAB ARRA authoriza- tions, the State Refunding Issuances realized a total 12/7/2009, 2009 Third 12/8/2009 & $602.8 million 2.61% of $62.2 million Series C 12/9/2009 in present value 2010 First debt service 2/24/2010 $195.3 million 2.97% Series B savings in 2010.

(a) The 2009 Qualified Zone Academy Bonds (QZABs) are special, federally-authorized tax-credit bonds that allow QZABs purchasers to receive federal income tax credits. In addition, the State will pay the purchaser a 1.6% supplemental coupon. 0 (b) The 2009 Qualified School Construction Bonds (QSCBs) are special, federally-authorized tax-credit bonds which allow QSCBs purchasers to receive federal income tax credits. the US Treasury. Qualified School Construction By refunding prior series of bonds and using the Bonds (QSCBs) were also authorized by ARRA ARRA authorizations, the State realized a total and were sold in the amount of $50.3 million on of $62.2 million in present value debt service December 8, 2009. QSCBs are bonds with federal savings in 2010. The refundings saved $33.5 mil- tax credits for the bond investor. Consequently, the lion. Compared to traditional tax-exempt bonds, State will pay no interest on these bonds. the BABs and QSCBs saved $18.1 million and $10.6 million respectively. Market conditions were very favorable for high quality and highly rated bonds like Maryland The history of General Obligation bond issu- General Obligation bonds throughout Fiscal ance and debt service for the last ten years is Year 2010. The True Interest Costs (TICs) in depicted in the charts on the following page.

Fiscal 2010 were the lowest on new money issues Continued on page 20 in at least 20 years.

19 Maryland State Treasurer’s 2010 ANNUAL REPORT

Debt Management Division continued from page 19 STATE OF MARYLAND GENERAL OBLIGATION BONDS DEBT SERVICE $900,000 Fiscal Years 2001-2010 $800,000

$700,000

$600,000

$500,000

$400,000 ($ in Thousands) $300,000

$200,000

$100,000

$0 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Interest $172,901 $172,897 $169,287 $205,716 $204,715 $230,474 $246,981 $262,610 $278,183 $292,878 Principal $297,966 $322,320 $327,583 $331,103 $349,068 $394,733 $407,073 $429,929 $466,617 $484,645 TOTAL $470,868 $495,217 $496,870 $536,819 $553,783 $625,208 $654,055 $692,539 $744,799 $777,523 Note: Principal includes sinking fund payments on QZABs. Totals may not add due to rounding. STATE OF MARYLAND ISSUANCES OF GENERAL OBLIGATION BONDS $2,100,000 Fiscal Years 2001-2010 $1,910,000 $1,720,000 $1,530,000 $1,340,000 $1,150,000 $960,000

($ in Thousands) $770,000 $580,000 $390,000 $200,000 $10,000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 QSCB $50,320 BAB $508,200 QZAB $18,098 $9,043 $4,378 $4,986 $5,563 $5,563 Refunding $109,935 $376,950 $855,840 $65,800 $798,080 Taxable $25,000 $40,000 Tax Exempt $400,000 $400,000 $725,000 $500,000 $750,000 $710,000 $675,000 $775,000 $840,000 $576,800 TOTAL $400,000 $528,033 $1,101,950 $500,000 $1,639,883 $750,000 $679,378 $779,986 $911,363 $1,938,963 Continued on page 21

20 Maryland State Treasurer’s 2010 ANNUAL REPORT

Debt Management Division continued from page 20 Capital Lease Financing every other month that meets the Lease Purchase Financing Guidelines established by the Office. Equipment Leases The lessor is paid semi-annually (January 1 and The State Treasurer’s Office provides financing July 1) from funds transferred at the beginning of for equipment, generally for terms of three or each fiscal year from the using agencies. five years, for State agencies and Higher Educa- tion Institutions using the Capital Lease-Purchase During Fiscal Year 2010, State agencies financed Program. Periodically the State Treasurer’s Of- $17.4 million of equipment under various Lease– fice procures a lessor, which finances equipment Purchase Agreements (See the following charts).

EQUIPMENT LEASE – PURCHASE FINANCING HISTORY $60,000 Fiscal Years 2001-2010 0 $50,000 During Fiscal Year 2010, State agen- $40,000 cies financed $17.4 million $30,000 of equipment

($ in Thousands) under various $20,000 Lease–Purchase Agreements. $10,000 0

$0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $31,220 $39,963 $42,696 $50,759 $16,707 $23,048 $58,958 $18,585 $6,022 $17,358

GOVERNMENT USE – FISCAL YEAR 2010 EQUIPMENT CLASSIFICATION – FISCAL YEAR 2010 Equipment Lease-Purchase Financing Equipment Lease-Purchase Financing Dept. of Agriculture 1% Security 3% Dept. of Information Lab Equipment 2% Information Technology 11% Lottery 32% Technology 20%

Public Television 5% Health & Lottery Machines Hospital 1% Education Stadium 32% Audio/Video/Wiring 6% Authority 23% 43% Public Safety 21%

Continued on page 22

21 Maryland State Treasurer’s 2010 ANNUAL REPORT

Debt Management Division continued from page 21 ENERGY PERFORMANCE LEASE – PURCHASE FINANCING HISTORY $55,000 Fiscal Years 2001-2010 $50,000

$45,000

$40,000

$35,000

$30,000

$25,000 ($ in Thousands) $20,000

$15,000

$10,000

$5,000

$0 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 $9,057 $8,896 $12,321 $1,460 $8,005 $0 $2,047 $19,856 $50,368 $16,073 0 Energy Leases GOVERNMENT USE – ENERGY LEASES During Fiscal The State Treasurer’s Office provides financing Year 2010, for energy efficiencies, generally for terms of 13, 14 or 15 years, for State agencies and Higher Dept. of State agencies Education Institutions. Using the Energy Perfor- Veterans Public Safety 32% financed $16.1 mance Lease-Purchase Program, the Office pro- Affairs million of energy 4% cures a lessor, who is paid semi-annually (Janu- Education 12% efficiencies under ary 1 and July 1) from funds transferred at the the 2007 Energy beginning of each fiscal year from the using agen- Performance cies. The savings from the Energy Performance Contracts are used to make the lease payments. Stadium Authority 52% Master Lease-Pur- chase Agreement During Fiscal Year 2010, State agencies financed and the January $16.1 million of energy efficiencies under the 2010 Energy 2007 Energy Performance Master Lease-Purchase Agreement and the January 2010 Energy Perfor- Performance mance Lease Purchase Agreement. The history Lease Purchase of the Energy Lease-Purchase Program for the Agreement. last ten years is depicted in the above chart. 0

22 Maryland State Treasurer’s 2010 ANNUAL REPORT

INFORMATION TECHNOLOGY DIVISION

Retirement, processed numerous test files and F SCOTT WRZESIEN check printing for new systems coming online Director from Retirement, RAD and DHR, participated [email protected] in multiple discussions regarding IAT ACH standards and practice and designed a new interface that allows the Ofiice to retrieve files The Information Technology (IT) Division from the new Retirement Information Technol- plans, builds, programs, manages and supports ogy System. all of the technology platforms that are used by the Maryland State Treasurer’s Office. These The IT Division provides all these systems on systems run programs developed in-house in an IBM i5 midrange platform that is utilized tandem with commercially developed software, by the Administration, Accounting, Banking providing the agency with highly customized ap- and Insurance Divisions. The IT Division also plications that address its specific needs. supports network-based database applications in the Office. The Division supports the Maryland State Treasurer’s Office disbursement, receipts and Industry standard hardware and software is reconciliation of moneys of the State, as defined provided to the agency staff. The platforms and in Article VI, Section 3, of the State Constitu- services provided to all Divisions in the Office tion. Total disbursements exceed $100 billion, include, but are not limited to: local area network- and receipts of over 1 million transactions total ing, internet access, email, application develop- over $100 billion. ment, website management, software evaluation, data communications, training, technical assis- Electronic funds transfer, check printing, positive tance and other technology services. pay and account reconciliation process services for the Comptroller’s Office’s General Account- Check Payment Processing ing Division (GAD), Revenue Administrative The IT Division services include the electronic Division (RAD) and Central Payroll Bureau retrieval of warranted check disbursement files (CPB), the State Retirement System, as well as the that feed a high speed customized check printing Department of Human Resources’ (DHR) Child process for the Comptroller’s GAD, RAD, and Support & CARES are provided to these agen- Retirement as well as for DHR’s Child Sup- cies by the Division. port & CARES. The IT Division provides for a unique agency check design, signature, MICR The Office works closely with all State agencies encoding and the delivery of an electronic posi- to streamline their disbursement, receipt and tive pay file to the State disbursement bank. reconciliation process. Over the past year, the IT Division expanded its automated fax report- The State Treasurer’s Office’s main processing ing of deposits to each State agency, enhanced system is an IBM i5 eServer midrange com- ACH vendor setup, created GAD Advice reports puter, which uses advanced function printing that significantly reduced the printing of over to create each printed document. Therefore, 150,000 advices, automated the EDI vendor set- the Office has developed a payment processing up, extended the Check Status System to RAD system that is flexible enough to allow the Office and CPB, created a new ‘Lien’ deduction for Continued on page 24

23 Maryland State Treasurer’s 2010 ANNUAL REPORT

Information Technology Division continued from page 23

to make payments for any agency in the State Electronic Funds Transfer (EFT) using MICR encoding, signatures and agency The State Treasurer’s Office, like many agencies or bank logos on secure paper check stock. The in the State, has recognized the need to support, use of secure paper stock precludes the need to where possible, movement away from paper maintain preprinted checks for each account. checks over to electronic funds transfer (EFT). The system also is protected with several secu- The State Treasurer, however, is ultimately re- rity features to detect and eliminate forgery or sponsible for all disbursements made by the State fraud. The checks are printed in presorted zip and must transmit these EFT’s in a standard code order to comply with the State’s presort format. Electronic payments and direct depos- vendor requirements that lower postage expense. its are run through a conversion program that Control transfer reporting is in place with the transforms the agency’s payment information GAD’s mailroom service group, who cut and into a CCD+, CTX or Electronic Data Inter- insert the checks into envelopes prior to pickup change format (EDI). Payments are sent in these by the State’s presort vendor. formats to the State’s disbursement bank, which The IT Division has completed testing of then forwards them to the Federal Reserve’s smaller MICR printers that will print expedited Automated Clearing House. The payments can checks faster and at a lower cost. The smaller then be deposited to any payee’s bank account MICR printers will also be integrated into the in the country. The IT Division, along with the Office’s contingency plan as an alternative check Banking Services Division, encourages the use of printing device. the more detailed Electronic Data Interchange, or EDI, payment method and has supported the growth of this method of payment. Continued on page 25

24 Maryland State Treasurer’s 2010 ANNUAL REPORT

Information Technology Division continued from page 24 Receipt Pocessing with the IT Division provide the State of Mary- land with an even more timely and accurate The Office’s receipt processing system comple- balance of State funds held at the bank. ments the payment processing system by allowing 0 any State agency to receive electronic payments New Banking projects include: allowing for Split The efforts made from taxpayers, credit card processors and federal Day Processing to accommodate Service Re- by the Office’s programs. Currently, many of the taxes collected duction Days and contingency events, manage Banking Services by the State, all credit card receipts, lockbox creation of wire transactions of the same amount Division in coordi- (used for high-volume, mail-in collections) and all using the incoming BAI file, new Checks Paid federal funds come in through the “Depository report, converted Direct Debit file pickup and nation with the IT Plus” process. transmission to BOA over to Connect: Direct and Division provide creation of a Daily Banking EFT Maintenance the State of Mary- The IT Division continues to work with the Report for GAD. Banking Services Division to enhance the au- land with an even tomated posting of ACH deposits. The process Automation Initiatives and more timely and makes use of variable logic to match the incom- Technology Support accurate balance ing deposit to the appropriate financial or batch of State funds Contingency Planning agency as specified by an agency. The resulting held at the bank. matched deposits are summarized on a report The IT Division has a nightly synchronization for each agency and automatically faxed. All of and lockdown of data and programs from our 0 the deposits are transmitted from the Office to Production System to our Development System. FMIS each night for processing and posting to This effort provides the State Treasurer’s Office the agency’s account. The automated fax report with a significantly shorter recovery time should from the Office gives the agency a one day ad- the production system experience a hardware vance notice of the incoming deposit. failure. The IT Division has also acquired new hardware to serve as a contingent platform for the Bank Reconciliation State Treasurer’s Office at an off-site location. The Information Technology Division continues The IT Division conducted an off-site Disaster to enhance the banking reconciliation system. Recovery (DR) test on March 17th of this year. Programming has focused upon streamlining the The test included a secured data transmission, ACH processing, wires, charge backs and data processing of ACH files into the ACH format for quality controls on vendor, tax and the State’s the State’s disbursement bank, printing of checks general ledger source files. The IT Division has and a secured transmission of a mock ACH file to worked with the Banking Services Division to the State disbursement bank. The DR Test was a enhance the reporting and processing of Unpre- complete success and helped the Office to identify sented Checks, Data Validation and Issued/Reis- additional data to include in our DR Plan. sued payroll checks. Secure File Transmissions The IT Division continued its partnership with both the Banking Services Division and the Our file transmission software enables the IT State’s depository bank to accommodate im- Division to transmit and receive production data proved transaction processing at a more sophisti- files from the State’s mainframe as well as the cated level and accurate settlement date reporting State’s disbursement and depository banks. of ACH Deposits. The efforts made by the Of- The IT Division’s contingency plan for financial fice’s Banking Services Division in coordination services transmission is in place and allows for

Continued on page 26

25 Maryland State Treasurer’s 2010 ANNUAL REPORT

Information Technology Division continued from page 25 an automated rerouting to the banks’ contingen- to application patching, to protect against new cy bank systems if their primary bank systems spyware/virus infection attacks. were to fail. Workstations Server Management The Office upgraded to Internet Explorer 8 The IT Division has continued to enhance and which has better security and features for brows- maintain its server hardware, network switches, ing the web. firewall and remote network access. The IT Division continued its upgrade of desktop PC’s PC’s have been built with a standard image to and notebooks as part of the normal replace- ensure a consistent installation for all Office em- ment cycle. ployees. This standard streamlines the rollout of new equipment and streamlines support from IT The IT Division continues to upgrade and for a standard PC workstation. support the current releases of server operating systems, applications, virus and spam protection This standardization to current releases of Micro- and server management utilities. This has allowed soft software and operating systems has provided for better control over network resources, greater the Office with greater flexibility to acquire and uptime for users and has enhanced the fault toler- implement desktop and network management ance and dependability of the entire network. solutions such as State-governed password poli- cies, automated Virus Scan database updates and Security software administration. The IT Division implemented better formal log review process for Virtual Private Network.

The IT Division implemented new technologies, including host-based Intrusion Detection and Prevention software, and new procedures related

0

The IT Division has continued to enhance and maintain its server hardware, net- work switches, fire- wall and remote network access. 0

26 Maryland State Treasurer’s 2010 ANNUAL REPORT

INSURANCE DIVISION

recommends to the Treasurer the combination F LAURA MCWEENEY that best protects the State of Maryland’s assets. Director [email protected] The Underwriting Unit secured the State’s blan- ket excess property coverage for FY2010 with a 9.5% rate reduction even though the State The Insurance Division is responsible for property values increased by 9%. The coverage administering the State’s Insurance Program, was slightly improved for this renewal and the which comprises both commercial insurance and premium was reduced by $46,052. self-insurance. Commercial insurance policies are procured to cover catastrophic property and The Unit requested benchmarking information liability losses, and other obligations derived in advance of the FY2010 Maryland Transit from State contracts, statutes and regulations. Administration (MTA) renewal for rail cars. Among the several exposures covered by com- After reviewing the current values of rail cars mercial policies are State-maintained toll bridges stored overnight at the largest location, and the and tunnels, rail operations, assorted professional value involved if two of the largest rail cars were liability exposures and student athlete accidents. to collide, the Underwriting Unit in conjunction The State also self-insures a significant portion with MTA authorized an increase in the expir- of its exposures and maintains the State Insur- ing limit of $26,000,000 to adequately protect ance Trust Fund to pay claims and the costs these assets. Since MTA values will be increas- associated with handling those claims. Self-in- ing as they take delivery of approximately surance coverage includes State-owned real and $47,000,000 in new equipment (locomotives), personal property, vehicles, and liability claims the Underwriting Unit renewed this coverage covered under the Maryland Tort Claims Act. with almost double the prior limit ($50,000,000). Still, the State achieved a rate reduction of 17% The Insurance Division is comprised of four and a savings of $59,456. Units: Underwriting, Loss Prevention, Claims, and Tort Litigation. The Division’s goal is to The FY2010 renewal of the Maryland Aviation provide statewide risk management through Administration (MAA) airport liability coverage loss protection (Underwriting), loss control (Loss for Baltimore Washington International Thur- Prevention), and loss restoration (Claims and good Marshall (BWI) and Martin Airports was Litigation Management). very positive for FY2010 resulting in a 23% re- duction of premium and saving MAA $187,000 Underwriting this year for the same coverage. The insurance carrier also offered a plan that may return some The mission of the Underwriting Unit is to premium to MAA if the losses remain low. manage the insurance needs of the State with self-insurance or through the procurement of In an excellent presentation to the State Trea- commercial insurance. Commercial insurance surer’s Office and the Division’s insurance car- protects the State Insurance Trust Fund (SITF) rier representatives, Maryland State Police Avia- from catastrophic losses and fulfills certain statu- tion Command (MSPAC) reviewed operational tory requirements and agency contractual agree- and safety measure changes made since the ments. The Unit analyzes commercial coverage tragic helicopter accident in 2008 and explained offerings, prices, limits and deductibles and then plans for future improvements. Even with large Continued on page 28

27 Maryland State Treasurer’s 2010 ANNUAL REPORT

Insurance Division continued from page 27 losses in 2008 and 2009, the premium was up The Loss Prevention Manager is working to pro- only $70,126 for FY2010, while increasing the vide Maryland State Police Aviation Command limit from $50,000,000 to $75,000,000. (MSPAC) with risk control services to provide an internet based “fatigue management training The Underwriting Unit continues to serve as a program” to flight crewmembers such as pilots resource for all State agencies for their insurance and medics. This service demonstrates MSPAC’s questions or concerns. continued efforts and desire to embrace recom- mendations put forth by the National Transpor- As part of its mission of managing the State’s in- tation Safety Board. surance needs, the Underwriting Unit conducts an annual insurance survey to gather data on State The Department of General Services received exposures. The insurance survey data is used to loss control services for an historical valuation purchase commercial insurance policies and as a (appraisal) of the Maryland State House in component for setting self-insurance premiums. Annapolis. Given the design and construction of an historic building, it invariably is more vul- Loss Prevention nerable to damage, especially by fire, and more The aim of loss prevention is to help State agen- expensive to repair after damage has occurred. cies develop specific action plans and safety prac- The valuation service conducted has assisted the tices to mitigate or eliminate State agencies’ most State in determining the historic replacement frequent or severe sources of preventable losses. cost of the building. An endorsement to in- crease the property coverage from $60,000,000 Annually, the Loss Prevention Unit conducts a to $100,000,000 for the State House was issued comprehensive review of numerous State agen- pending the outcome of the valuation, which cies’ loss histories to identify problem areas and revealed an historical replacement cost of to help agencies with high severity claims and/ $107,897,000. Currently, the Underwriting or frequency take corrective measures. These Unit in conjunction with our insurance brokers efforts are expected to significantly reduce loss is working to ensure that an appropriate level frequency and the severity of damage sustained of coverage and protection is provided for this to State-owned buildings and contents. significant historic asset. The historic valuators also made recommendations for future preserva- This year the Loss Prevention Manager and Di- tion efforts such as taking detailed photographs rector met with the Maryland State Police (MSP) and molds of brass finishings in the State House. following a series of settlements of significant au- tomobile property and liability claims emanating The Loss Prevention Manager is currently work- from the Eastern Shore. The Manager shared ing on the coordination of aerial infrared testing trend and loss data and received information for the roofing systems of the Annapolis Capital about the action plans implemented by MSP to Complex and campus of University of Mary- curtail the frequency and severity of these losses. land College Park. Aerial inspections of roofing systems are performed to pinpoint where moisture Due to a notable increase in well contamination is penetrating the structure before there are visible claims, the Loss Prevention Manager prepared signs, structural damage or business interruption. and presented loss analysis of well claims by zip By using the service and the results of the analysis, code, fiscal year, and incurred losses to the State facilities management can extend the life of the Highway Administration (SHA) to assist them roof structures while reducing maintenance ex- in their efforts to identify, map and address the penditures and potential property-related claims. concentrated areas of losses. Continued on page 29

28 Maryland State Treasurer’s 2010 ANNUAL REPORT

Insurance Division continued from page 28 Claims to the agency. One of the three has resulted in a felony charge against the claimant. The Claims The Claims Unit has focused its efforts on two Unit plans to take advantage of training MAIF areas: 1) providing more efficient and effec- offers in areas such as forensics, recognition of 0 tive claims service to State agencies and to the dubious medical provider practices, and fraud general public who file claims with the State Following the ring detection. Treasurer’s Office, and 2) developing partner- historic snowfall ships with other State agencies who can provide In FY10, the Claims Unit received 4,370 claims. in February, 2010, cost-effective support for the Claims Unit. It resolved 4,495 claims. The Unit exceeded its road hazard productivity goal of a 1:1 closing ratio by 2.8%. Following the historic snowfall in February, 2010, claims increased road hazard claims increased by over 130%. by over 130%. Most claims were related to snow removal opera- 2006 2007 2008 2009 2010 tions. The Claims Unit consulted with State Actual Actual Actual Actual Actual 0 New Claims Highway Administration (SHA) and the Office 3491 3693 4050 3880 4370 of the Attorney General (OAG) to address the Processed specific standards for handling claims for dam- Claims Closed 3809 3703 4034 4462 4495 Pending aged mailboxes and other hazards specifically 507 497 541 2084* 2295 Open Claims arising from the snow removal operations. The Claims Unit adjusted its procedures accordingly. * Adjustment for files in subrogation status

In 2007, Congress enacted legislation that required all insurers, including self-insurers like INSURANCE DIVISION PERFORMANCE MEASURES the State of Maryland, to report to the Centers # OF CLAIMS FY06-FY10 of Medicare and Medicaid Services (CMS) all 5000 bodily injury settlements and judgments paid to Medicare beneficiaries. The Division has fully engaged its vendor-partner, Insurance Offices 4000 Services (ISO), to report all required data to CMS. The Division is ahead of schedule in completing its internal procedures to gather and 3000 report Medicare information. The Division has also implemented outreach to the OAG which assists in complying with the federal mandate 2000 for payments.

Insurance Fraud is an unfortunate but foresee- 1000 able occurrence in the area of liability claims handling. The Division has partnered with 0 the Maryland Insurance Administration (MIA) 2006 2007 2008 2009 2010 and the Maryland Automobile Insurance Fund Actual Actual Actual Actual Actual (MAIF) to combat fraudulent activity. MIA New Claims Claims Pending provides the Division with support for inves- Processed Closed Open Claims tigating claims where fraudulent activity is suspected. Since forming the partnership with Continued on page 30 MIA in FY10, three claims have been referred

29 Maryland State Treasurer’s 2010 ANNUAL REPORT

Insurance Division continued from page 29 Tort Litigation Since FY06, the State Treasurer has been served with proper notice of suit 539 times. Of the The Litigation Manager is responsible for devel- cases closed, approximately 31% were settled; oping and implementing a comprehensive litiga- 55% were dismissed; judgments and defense tion plan for all tort claims in litigation, as well verdicts accounted for 7% each. as, in consultation with the Supervising Attorney of the Tort Claims Unit, reviewing settlement requests from the assistant attorneys general. CASE DISPOSITION – FY06 TO FY 2010 The Litigation Manager works closely with the Settled Dismissed/ Judgment Defense Total Supervising Attorney to proactively resolve these Closed Verdict Closed matters by investigating and evaluating cases, by 128 232 29 30 419 providing settlement authority, and when neces- sary, by briefing the Insurance Review Commit- tee on high dollar value settlements. FY10 CLOSED CASES SERVED SINCE FY06 Additionally, the Litigation Manager attends Judgement 7% settlement conferences, mediations, and other Defense Verdict 7% court-mandated activities with the assistant at- torney generals and provides input to bring the case to an equitable settlement. The Litigation Manager also works closely with the Claims Unit adjusters to provide feedback on investiga- Settled 31% tions. The Litigation Manager generally briefs the underlying adjuster on the status of its claims in litigation and will brief the Unit gener- Dismissed/Closed 55% ally, on significant litigation of interest.

In January 2009, the threshold amount for full Insurance Review Committee review of settle- ment requests was reduced from $200,000, the tort claims cap, to $100,000. This ensures an extensive consideration of all settlements in excess of the threshold amount.

30 Maryland State Treasurer’s 2010 ANNUAL REPORT

INVESTMENT DIVISION

investment of choice driving yields ever lower. F MARY CHRISTINE JACKMAN The World was used to discussing the “BRICs” Director (Brazil, Russia, India and China) and their impact [email protected] on the global economy. However, Fiscal Year 2010 brought the impact of the “PIIGS” (Portu- gal, Ireland, Italy, Greece and Spain) to the fore- 0 The Fiscal Year As We Knew It front as Greece and Ireland wrestled with default June 30, 2010 on their outstanding debt. The eruption of the The U.S. Icelandic Volcano Eyjafjallajokull on April 14th unemployment The federal “Cash for Clunkers” program began became emblematic of the year. The volcanic July 1, 2009, and was slated to last until November rate was 9.4% eruption spilled ash over most of Europe, closing 2009, but the appropriated $3 billion was com- on July 1, 2009, airspace, bringing many businesses to a halt and pletely exhausted by August 24th. This prompted peaked at 10.2% forcing everyone to stay indoors. Those stranded an additional federal appropriation of $2 billion. in Europe had to find unconventional ways out in November 2009 The program was promoted as providing stimu- of the ash fog and return to their homes by way (the highest in lus to the economy by boosting auto sales while of Africa or Asia. Likewise, the Great Recession 26 years) and putting safer, cleaner, and more fuel-efficient cars created much financial fog, brought business as on the roadways. The American Recovery and ended the fiscal usual to a halt, and sent consumers scurrying to Reinvestment Act of 2009 (ARRA), which made year at 9.7%. their homes. Unconventional ways were sought to supplemental appropriations for job preservation escape the choking conditions. and creation, infrastructure investment, energy ef- 0 ficiency and science, assistance to the unemployed, The U.S. unemployment rate was 9.4% on July and State and local fiscal stabilization, for the fiscal 1, 2009, peaked at 10.2% in November 2009 year ending September 30, 2009, and for other (the highest in 26 years) and ended the fiscal year purposes began February 17, 2009. However, the at 9.7%. The U-6 unemployment rate (which ongoing effects of the “Great Recession” (so-called includes the under-employed) climbed to 17.5%, because it lasted 18 months, the longest of any a full year after the Great Recession had offi- recession since the “Great Depression”), did not cially ended. It was difficult to believe the Great mitigate, and Congress began to talk about further Recession had ended because so many were still stimulus programs. The good news was that the looking for work and/or were facing foreclosure “Great Recession,” which began December 2007, on their homes. One hundred and forty banks officially ended June 2009. The bad news was that failed during calendar 2009, and 85 more had no one realized it had ended during Fiscal Year failed before June 30, 2010. At the end of June, 2010. Even the National Bureau of Economic Re- banks were not lending to a significant degree, search dared not announce the end of the “Great consumers were reluctant to spend, preferring to Recession,” until September 20, 2010. pay down debt and to save (the personal saving rate was 6.2% for June 2010), private corpora- The world-wide effects of the Great Recession tions were reluctant to hire workers for fear of a were evident when Dubai World, the investment double-dip recession, and 3.2 million long-term and development arm of the Emirate of Dubai, unemployed lost their unemployment benefits requested a six-month delay for repayment of a because Congress turned down another exten- $60 billion dollar debt. Consequently, the global sion request by President Obama. New home markets had a major attack of risk aversion. sales tumbled almost 33% after the government U.S. Treasury bills, notes and bonds were the Continued on page 32

31 Maryland State Treasurer’s 2010 ANNUAL REPORT

Investment Division continued from page 31 new homeowner tax credit expired. Pending The Investment Division is not responsible for home sales remained up in June but only because the investment and management of all funds. Congress extended the time to close on short Other State agencies are responsible for the sales and other housing purchase commitments State’s pension funds (MSRPS), the insurance from June to September. The latest trend in reserves of the Maryland Automobile Insurance foreclosures was that distressed owners simply Fund (MAIF), the Injured Workers Insurance 0 stopped paying their mortgage obligations, Fund (IWIF), the Maryland College Savings knowing that it would take a long time between Program and certain endowment funds at public The Investment foreclosure and eviction, estimated at an average colleges and universities. Division of the 438 days nationwide in June. Even with mort- State Treasurer’s gage rates below 5%, mortgage applications for Interest earnings on investments under the stew- Office primarily new homes were at a 13 year low. At some point ardship of the State Treasurer accrue to the Gen- eral Fund unless State law directs that the interest invests the cash there will be an end to government stimuli. In the meantime, interest rates are expected to re- should accrue to a specific fund. During the 1990 balances that main low for “an extended period of time” as the session, the General Assembly enacted legislation, are temporarily Federal Open Market Committee has written. sponsored by the Treasurer’s Office, to allow all idle between the Caught between the proverbial rock and a hard operating funds invested by the Treasurer to be time revenue is place, Congress cannot begin austerity measures invested in a common pool. Interest earned from this pool is allocated to the various State agencies collected and the while the economy remains so very fragile. and to the General Fund on a pro-rata basis. This time budgeted Through it all the Investment Division of the legislation was updated during the 2010 session in amounts are State Treasurer’s Office continued to invest in recognition of the fact that many of the indi- disbursed. accordance with established laws, policies and vidual funds were already receiving support from procedures. Section §6-222 of the State Finance the General Fund. 0 and Procurement Article of the Annotated Code of Maryland governs the investment of the State’s PORTFOLIO COMPOSITION AT JUNE 30, 2010 unexpended or surplus money. Furthermore, the Investment Type Dollar Amount Percentage State Treasurer’s Investment Policy provides ad- Repurchase Agreements 2,042,846,936 39.97% ditional guidance for investments. The conserva- U.S. Treasuries 895,000 .02% tive stance of the Office may have limited interest U.S. Government Agencies 2,788,898,000 54.56% earnings but it insured safety of principal invested. Other Investments 278,665,439 5.45% Total Portfolio 5,111,305,375 100.00% The Investment Division of the State Treasurer’s Office primarily invests the cash balances that Other Investments 5.45% U.S. Treasuries .02% are temporarily idle between the time revenue is collected and the time budgeted amounts are disbursed. The Division is also responsible for a number of longer-term investment activities associated with the purchase of 20-year develop- Repurchase ment easements on agricultural land and the Agreements 39.97% U.S. Government payment of lottery prizes over 19-year periods. Agencies 54.56% The Division manages the investment of Gen- eral Obligation bond proceeds and also directs the short-term and long-term investments of a number of trustee accounts under State agency revenue bond indentures. Continued on page 33

32 Maryland State Treasurer’s 2010 ANNUAL REPORT

Investment Division continued from page 32 Under State law, investments by the State a complete list of the June 30, 2010 investment Treasurer’s Office are limited to secured bank portfolio, please see Appendix A. accounts, full faith and credit obligations of the federal government, obligations of certain On June 30, 2010, the total of all portfolios federal agencies or instrumentalities, repurchase under the active management of the State Trea- agreements collateralized by those securities, surer’s Office was $5,111,305,375. The General certain money market mutual funds and limited Fund portfolio was $4,770,485,256. amounts of commercial paper. PORTFOLIO BALANCES U.S. government agency investment securities are Fiscal Year General Fund Total Portfolio procured competitively through approved bro- 2000 4,043,592,678 4,341,640,537 kerage firms. To be approved, a firm must: (1) be 2001 4,734,087,661 4,983,070,473 a primary dealer reporting to the Federal Reserve 2002 4,007,351,370 4,338,575,761 or a registered member of the New York Stock 2003 3,393,570,110 3,582,550,645 Exchange, or (2) file financial statements exhibit- 2004 4,212,322,055 4,469,538,542 ing financial resources considered adequate by 2005 5,403,757,921 5,685,280,744 the Investment Division and approved by the 2006 6,480,959,704 6,867,711,888 Treasurer, and (3) provide competitive bids to the 2007 6,719,444,969 7,116,500,896 Investment Division on a regular basis. 2008 6,455,858,210 6,557,395,702 2009 4,909,433,669 5,088,853,273 The Treasurer’s policy is to make sure that local, 2010 4,770,485,256 5,111,305,375 regional and minority firms have an opportu- nity to bid on a portion of the State’s investable The average rate of return on the General Fund funds. This is a highly competitive process. The was 2.07%. The State Treasurer’s investment Office’s fiduciary responsibility to Maryland program surpassed the three-month Constant residents requires scrupulously seeking the best Maturity Treasury Bill, which averaged 0.12% prices for all investments. Inclusion on the list for the same time period. grants the privilege of submitting bids and offers but does not guarantee a transaction. AVERAGE ANNUAL INTEREST RATES 3 Month Treasury Fiscal Year General Fund The investment portfolio is designed to meet Bill Rate the cash flow needs of the State (i.e., have funds 2000 5.61% 5.38% available to cover disbursements). During Fiscal 2001 5.93% 5.27% Year 2010, the Investment Division invested in 2002 2.92% 2.18% repurchase agreements with maturities of 90 2003 1.94% 1.32% days or less. Repurchase agreements collateral- 2004 1.28% 0.97% ized 102% by U.S. Treasuries and federal agency 2005 2.26% 2.26% securities provide safety, have short maturities 2006 4.06% 4.17% and have rates of return that are generally higher 2007 5.16% 4.74% than Treasury and agency securities with compa- 2008 4.89% 1.89% rable maturity dates. Treasury and federal agency 2009 3.39% 0.56% securities with a maturity of up to five years 2010 2.07% 0.12% were also purchased in order to provide portfolio diversification, liquidity and a higher rate of re- Due to lower average balances and lower interest turn. This maturity extension was well within the rates, the total interest earned from the portfolio guidelines of prudent portfolio management. For decreased 113 million dollars for Fiscal Year 2010

compared to 2009. Continued on page 34

33 Maryland State Treasurer’s 2010 ANNUAL REPORT

Investment Division continued from page 33 TOTAL INTEREST EARNED Local Government 0 Fiscal Net General Allocated to Investment Pool Total The Treasurer has Year Fund State Agencies Section 22G of Article 95 of the Annotated encouraged local 2000 121,951,720 103,173,287 225,125,007 Code of Maryland establishes the Maryland Lo- 2001 136,981,074 144,249,899 281,230,973 governments and cal Government Investment Pool (LGIP) and as- 2002 82,641,807 66,399,769 149,041,576 signs to the State Treasurer’s Office the respon- eligible authori- 2003 37,205,637 42,240,523 79,446,160 sibility for administering the Pool. The actual ties to participate 2004 25,037,345 29,053,449 54,090,794 management of the Pool has been contracted in the Pool, an 2005 52,886,074 54,538,463 107,424,537 out to The PNC Financial Services Group, Inc. “AAAm” rated 2006 149,613,238 109,222,108 258,835,346 2007 150,798,001 205,589,917 356,387,918 The Treasurer has encouraged local govern- money market 2008 155,170,184 207,179,098 362,349,282 ments and eligible authorities to participate account. 2009 102,768,740 142,619,087 245,387,827 in the Pool, an “AAAm” rated money market 2010 44,190,425 87,921,654 132,112,079 account. At the end of Fiscal Year 2010, there 0 were 300 participants, up from 298 in Fiscal Securities Lending Year 2009. The fund balance as of June 30, As is typical with a portfolio containing a large 2010, was $2,795,956,544. The actual yield for number of securities, the State engages in a secu- Fiscal Year 2010 was .21%. rities lending program. In this program, the State contracts with a third party securities lender that To ensure that the Pool is responsive to the arranges to have specific securities in the portfo- needs of the participants, the Treasurer created lio loaned to brokers and dealers who need those an advisory panel consisting of representatives securities for a short period of time. In return of the Pool’s members. The panel meets semi- for borrowing the security, the broker or dealer annually, reviews the fund’s activities and makes posts cash collateral equal to 102% of the market recommendations to the Pool’s administrator. value of the borrowed security. The securities The Pool’s administrator produces a quarterly lender invests the cash collateral for the period newsletter. This newsletter acts as an effective of the loan. At maturity, the State securities are marketing tool for potential participants and a returned and the interest earned is allocated valuable update for members. between the State and the securities lender. LOCAL GOVERNMENT INVESTMENT The drastic restructuring of balance sheets by POOL FUND BALANCE the Prime Broker Dealers significantly reduced Fiscal Fund Balance Number of Actual Yield $ Inc (Dec) the demand for securities lending. Therefore, Year as of June 30 Participants Prev. 12 Months Prev. Year the securities lending program earned 60% less 2000 813,759,289 252 5.73% 2.07% than the previous fiscal year. 2001 1,141,544,255 270 5.69% 40.28% 2002 1,422,684,869 276 2.53% 24.62% SECURITIES LENDING EARNINGS 2003 1,674,169,653 282 1.45% 17.67% Fiscal Year Earnings % Change 2004 1,797,814,980 285 1.03% 7.38% 2005 1,951,361,257 287 2.15% 8.50% 2005 424,157.80 - 2006 463,384.05 9.20% 2006 1,900,127,809 289 4.19% (2.69%) 2007 568,769.87 22.79% 2007 2,100,327,613 292 5.30% 10.54% 2008 1,926,722.19 238.75% 2008 2,420,372,782 294 4.04% 15.24% 2009 380,301 -80.26% 2009 2,759,769,583 298 1.41% 14.02% 2010 151,266 -60.22% 2010 2,795,956,544 300 0.21% 1.31%

34 Maryland State Treasurer’s 2010 ANNUAL REPORT

LEGAL DIVISION

F Representation in various types of litigation, F STEVEN VANDERBOSCH administrative and regulatory proceedings Director F Responding to citizen inquiries, and [email protected] F Providing legal training to the staff as appropriate The Division Director and While the entire Office of the Attorney General (OAG) serves as a resource to the Treasurer, four Principal Counsel assistant attorneys general have been assigned F Advise the Treasurer and Office staff on a to the State Treasurer’s Office to provide direct, variety of issues affecting the Office and its full-time legal support on a full range of services interaction with federal, State and local gov- including: ernment agencies, contractors and the public; F Serve as in-house counsel for the issuance of F Legal advice and opinions General Obligation bonds, frequent capital F Contract preparation and review equipment lease financings, and periodic F Preparing and editing rules, regulations, and Build America Bonds, Qualified School policies Construction Bonds, and Qualified Zone Academy Bonds; F Drafting and review of legislation F Act as a legal resource for other State agencies F Overseeing and coordinating the State’s legal regarding their proposed uses of tax-exempt representation under the Maryland Tort bond money for capital projects; Claims Act (MTCA) Continued on page 36

35 Maryland State Treasurer’s 2010 ANNUAL REPORT

Legal Division continued from page 35 The Deputy Counsel – Supervisor, Tort Claims Litigation Unit The Deputy Counsel is the Supervising Attorney of the Tort Claims Litigation Unit (TCLU). The Unit is being gradually staffed over time with attorney and legal assistant positions authorized by the General Assembly on the recommenda- tion of the Treasurer and the Attorney General. The goal of the TCLU is to bring consistency to the defense and resolution of cases brought against the State and its agencies under the Maryland Tort Claims Act by employing effec- tive defense strategies, controlling State risk and containing litigation costs. Primary Functions of the OAG General Legal Advice The OAG serves as counsel to the Treasurer and Office staff on many varied issues affecting the State Treasurer’s Office including legislative, administration, litigation and personnel matters. F At the request of the Treasurer, provide advice, counsel and legal analysis of the Finance/Debt Management Treasurer’s constitutional and statutory pow- In Fiscal Year 2010, the Office of the Attorney ers and responsibilities; General participated in the issuance of over F Provide advice, counsel and legal analysis on $1.2 billion in tax-exempt Capital Improvement matters before various boards and commis- Bonds and the financing of $23.7 million in sions on which the Treasurer serves, princi- Capital Equipment Leases. pally the Board of Public Works; F Provide advice and assistance on the pro- The OAG’s involvement with bond sales begins curement and administration of a wide with review and comment to both the Depart- variety of financial service contracts for the ment of Budget and Management and to the Office, as well as for other State agencies, staff of the General Assembly on annual en- including banking, finance, investment and abling legislation and individual bond bills. The related information technology services; OAG participates in the preparation and review of official statements and other offering docu- F Provide analysis and advice to the Insurance ments, including authorizing resolutions of the Division on procurement and administration Board of Public Works. For all loans authorized of commercial insurance policies and on since 1989, the Director researches and writes general insurance issues; and bond counsel opinions for joint signature with F Provide advice and counsel to the Treasurer the Attorney General. and Office management on personnel mat- ters, including disciplinary matters, and rep- Ongoing legal advice is provided, as needed, resent the Office in personnel proceedings. to various State agencies that receive General Continued on page 37

36 Maryland State Treasurer’s 2010 ANNUAL REPORT

Legal Division continued from page 36 Obligation Bond funding concerning federal Tort Claims tax code restrictions on use of bond proceeds. Under the supervision of the Deputy Counsel, the Of particular concern are changes in use and TCLU: private business use of facilities that have been financed with the proceeds of tax-exempt bonds. F Drafts and reviews MTCA-related legislation and regulations, Two law firms are under contract with the At- F Advises the Treasurer’s Office Insurance Di- torney General to provide bond counsel services vision on many of the approximately 4,000 for the State Treasurer’s Office: Ballard Spahr tort and auto claims filed each year under LLP and Kutak Rock, LLP. the Maryland Tort Claims Act (MTCA). Board of Public Works F Provides legal representation to the State, its At the request of the Treasurer, the OAG at- agencies and employees in Federal and State torneys review all agenda items that come before Courts in the defense of cases brought under the Board of Public Works, including proposed the MTCA. legal settlements and insurance matters, provide F Provides litigation support to the Assistant 0 suggested questions and comments to a Deputy Attorneys General throughout State agen- The Office is Treasurer concerning legal, procurement and cies who also defend cases brought under the responsible for funding issues, and attend Board of Public MTCA, including: contract admin- Works meetings to be available to the Treasurer – Training attorneys and serving as a istration of its own for legal advice. resource for developing trial strategies, contracts and Procurement – Recommending and approving the use agreements for As a Primary Procurement Unit, the State of expert witnesses, banking, finance, Treasurer’s Office is generally responsible for the – Writing and reviewing briefs, memoran- procurement of all State banking, finance and da, and motions, and investments, insur- insurance contracts. The Office is responsible for – Reviewing and advising on the litigation ance and informa- contract administration of its own contracts and and settlement of these cases tion technology, agreements for banking, finance, investments, F Participates in all appellate litigation in cases as well as for bank- insurance and information technology, as well involving the MTCA. ing and finance as for banking and finance contracts for other agencies. The OAG is engaged in contract and contracts for other procurement issues, including Requests for Pro- agencies. posals, Invitations for Bids, contract formations and modifications, claims, protests and appeals. 0

37 Maryland State Treasurer’s 2010 ANNUAL REPORT

APPENDIX A

Investment Inventory June 30, 2010

MARKET VALUE SUMMARY REPORT

32 FHLB 98 MONEY MARKET FUNDS 5.4% 30/360 8.5% 34 FNMA 30/360 19.4% 75 NEG CD COMP ACT/365-6 0.1% 36 FFCB 30/360 1.2%

37 FHLMC CPN BDS 30/360 13.2%

60 REPO OPEN ACT-360 39.7% 39 OTHER AGENCIES 30/360 12.7%

12 Treasury Notes 0.0%

12 TREASURY NOTES 1,287K 0.0% 32 FHLB 30/360 439,332K 8.5% 34 FNMA 30/360 999,200K 19.4% 36 FFCB 30/360 59,431K 1.2% 37 FHLMC CPN BDS 30/360 678,286K 13.2% 39 OTHER AGENCIES 30/360 651,934K 12.7% 60 REPO OPEN ACT-360 2,042,847K 39.7% 75 NEG CD COMP ACT/365-6 2,876K 0.1% 98 MONEY MARKET FUNDS 275,789K 5.4%

Total: 5,150,982K 100.0%

38 Maryland State Treasurer’s 2010 ANNUAL REPORT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8,349.75 28,125.00 34,062.50 401,134.32 241,875.00 102,021.56 146,659.30 765,625.00 291,250.00 315,000.00 419,062.50 254,475.02 248,750.00 443,750.00 195,000.00 Unrealized Loss Unrealized Unrealized Gain Unrealized 9,669.34 17,244.20 38,548.61 26,913.54 SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD 40,266.93 749,166.67 573,958.33 301,388.89 146,492.50 622,222.22 1,287,777.78 1,176,388.89 Source Price Int Curr Accr 1,318,055.56 2,583,333.33 1,319,444.44 9,329,061.94 3,022,334.06 792,112.52 101.531250 143.774616 139.343744 100.668315 101.656250 100.031250 494,670.29 100.125000 100.843750 146.687504 100.437500 100.468750 100.656250 100.375000 100.562500 100.406250 6,192,731.25 100.625000 1,286,782.81 11,511,314.06 5,032,812.50 Price Market Value Market 50,187,500.00 25,414,062.50 50,218,750.00 50,015,625.00 50,765,625.00 50,281,250.00 50,234,375.00 50,312,500.00 439,331,626.56 100,406,250.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 537,637.50 348,010.99 885,648.49 355,000.00 895,000.00 540,000.00 6,184,381.50 6,185,000.00 4,998,750.00 11,415,000.00 11,409,292.50 5,000,000.00 49,987,500.00 49,997,500.00 49,992,500.00 49,992,500.00 24,995,000.00 49,970,000.00 99,962,500.00 25,000,000.00 Scheduled Book 49,990,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 436,415,000.00 436,309,292.50 Sched. Par/Shares 100,000,000.00 6.1141 7.2512 3.1272 7.4142 3.1250 3.1054 3.0108 3.1000 6.2767 8.5395 6.2535 5.5035 7.2500 7.2500 6.1000 8.0973 7.0048 3.0554 6.2824 YTM TR YTM 7.0000 7.0000 7.0000 6.5048 8.0042 3.0500 6.2500 5.5000 6.0088 8.5000 6.5000 3.0000 6.0000 Coupon 2 2 2 2 2 2 2 2 2 2 2 2 34 34 34 634 634 Fund Iccode 100 100 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp 12 AVAILABL AVAILABL 12 AVAILABL 32 AVAILABL 32 AVAILABL 32 AVAILABL 32 AVAILABL AVAILABL 32 AVAILABL 32 AVAILABL 32 AVAILABL 32 AVAILABL 32 AVAILABL AVAILABL 1 1 1 17 71 71 71 71 31 31 31 31 31 31 31 31 31 31 31 31 37 37 53 53 53 76 76 76 Brok Bank Maturity Purchase 10/17/2013 10/17/2018 10/01/2013 01/27/2014 10/01/2018 01/27/2019 01/28/2014 01/28/2014 01/28/2019 01/28/2019 01/30/2014 01/30/2014 01/30/2019 01/30/2019 01/08/2014 01/08/2019 02/16/2024 04/28/2014 08/16/2026 04/28/2019 03/20/1994 05/05/2014 05/05/2019 08/26/1996 04/30/2014 04/30/2019 02/06/2014 02/06/2019

CUSIP Count 2 Count Count 9 Count 3136FJDL2 3136FJB83 912810EE4 3136FJGP0 3133XXYK7 3133XXXY8 3133XWJR1 3133XXXU6 912810EM6 3133XWJ34 3133XWJX8 3133XWJY6 3133XWNR6 3133XWMU0 Description Treasury Note 8.5 Note Treasury 7.25 Note Treasury NOTES 12 TREASURY FHLB QC 072610 FHLB QC 072710 FHLB CN 102710 FHLB QC 072910 FHLB QC 072910 FHLB QC 080510 FHLB QC 102710 FHLB QC 102910 FHLB QC 080410 FHLB 30/360 32 093010 FNMA 1XC FNMA QC 041610 FNMA CN 070710 INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 152 153 Type Inv 12880 12890 12891 12900 12901 12925 13180 13186 13218 Type Inv 12509 12563 12821 No. Inv

39 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 78,125.00 83,125.00 61,875.00 76,875.00 26,641.13 111,875.00 111,875.00 64,375.00 46,875.00 85,625.00 65,625.00 119,375.00 40,906.25 109,375.00 109,375.00 135,000.00 Unrealized Loss Unrealized Unrealized Gain Unrealized 748,611.11 748,611.11 748,611.11 SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD 737,916.67 737,916.67 753,819.44 418,458.33 755,555.56 694,166.67 272,530.50 746,666.67 754,375.00 754,375.00 349,826.39 735,000.00 735,000.00 Source Price Int Curr Accr 100.156250 100.156250 100.156250 100.218750 100.218750 100.218750 100.218750 100.187500 100.218750 100.093750 100.093750 100.093750 100.093750 100.093750 100.093750 100.250000 Price Market 27,525,781.25 Value Market 17,926,790.63 50,078,125.00 50,078,125.00 50,078,125.00 50,109,375.00 50,109,375.00 50,109,375.00 50,109,375.00 50,109,375.00 50,125,000.00 25,046,875.00 50,046,875.00 50,046,875.00 50,046,875.00 50,046,875.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 17,900,149.50 17,910,000.00 27,484,875.00 24,981,250.00 49,997,500.00 49,997,500.00 27,500,000.00 49,982,500.00 49,992,500.00 49,970,000.00 49,985,000.00 49,995,000.00 25,000,000.00 Scheduled Book 49,990,000.00 49,990,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 Sched. Par/Shares 3.1631 3.5511 3.5011 3.1565 3.3120 3.3120 3.1500 3.1500 3.3033 3.2076 3.3022 3.5500 3.5500 3.5500 3.2664 3.5044 YTM TR YTM 3.2500 3.2500 3.2500 3.4044 3.5000 3.5000 3.5000 3.5000 3.3000 3.3000 3.3000 3.3000 3.2000 3.4000 3.4000 3.4000 Coupon 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 Fund Iccode 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL 71 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 10 10 10 10 53 53 53 78 78 76 76 76 79 54 30 Brok Bank

(CONT.) (CONT.) Maturity Purchase 01/21/2014 01/21/2014 01/15/2014 01/21/2019 01/21/2019 01/15/2019 01/14/2014 01/14/2014 01/14/2014 01/14/2019 01/14/2019 01/14/2019 01/16/2014 01/16/2014 01/16/2019 01/16/2019 01/27/2014 01/27/2019 01/22/2014 01/22/2019 01/28/2014 01/28/2014 01/28/2014 01/28/2019 01/28/2019 01/28/2019 01/29/2014 01/29/2014 01/29/2019 01/29/2019 02/05/2014 02/05/2019

CUSIP 3136FJF71 3136FJL74 3136FJC41 3136FJQ61 3136FJH61 3136FJH61 3136FJL90 3136FJK83 3136FJK83 3136FJK26 3136FJN23 3136FJD65 3136FJM32 3136FJD40 3136FJN80 3136FJM99 Description FNMA CN 071310 FNMA CN 071310 071310 FNMA SA FNMA CN 071410 FNMA CN 071510 FNMA CN 071510 FNMA CN 072010 FNMA CN 072010 FNMA CN 072110 072610 FNMA 1XC FNMA CN 072710 FNMA CN 072710 FNMA CN 072710 FNMA CN 072810 FNMA CN 072810 FNMA CN 080410 INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 12836 12837 12838 12843 12844 12845 12860 12861 12865 12882 12887 12888 12889 12895 12896 12921 No. Inv

40 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11,034.00 93,125.00 35,201.25 34,375.00 34,375.00 32,895.00 59,665.63 191,875.00 108,125.00 176,875.00 127,500.00 215,625.00 845,312.50 104,820.50 Unrealized Loss Unrealized Unrealized Gain Unrealized 4,066,824.50 39,861.11 27,534.72 SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD 909,406.25 599,717.78 46,588.00 191,364.72 127,395.00 299,479.17 299,479.17 173,680.56 173,680.56 103,020.83 884,722.22 551,250.00 577,500.00 679,305.56 460,647.94 Source Price Int Curr Accr 101.418782 103.281250 108.103649 100.156250 100.156250 100.156250 100.281250 100.125000 100.125000 100.343750 100.343750 100.406250 100.062500 100.062500 100.250000 100.250000 7,365,195.00 Price Market 20,140,143.75 Value Market 50,171,875.00 50,171,875.00 15,694,015.63 17,226,875.00 25,820,312.50 50,078,125.00 50,078,125.00 50,203,125.00 25,015,625.00 25,015,625.00 54,051,824.50 59,431,406.25 36,235,362.50 50,125,000.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 7,354,161.00 17,193,980.00 7,356,000.00 20,115,000.00 36,130,542.00 15,634,350.00 24,981,250.00 24,981,250.00 36,145,000.00 20,104,942.50 17,200,000.00 49,987,500.00 49,997,500.00 15,650,000.00 24,975,000.00 58,522,000.00 49,970,000.00 49,985,000.00 49,985,000.00 49,995,000.00 49,980,000.00 58,600,000.00 25,000,000.00 25,000,000.00 25,000,000.00 Scheduled Book 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 Sched. Par/Shares 3.1315 3.1381 3.1218 3.3511 3.1587 3.1522 3.1326 3.0717 3.1087 3.5126 3.1250 3.1250 3.1250 3.4831 6.5071 3.1500 3.1500 4.1056 3.0108 3.1000 3.1000 4.1000 3.0663 3.0663 3.3500 YTM TR YTM 3.0054 3.0500 3.0500 3.0500 6.5000 3.0000 3.0000 Coupon 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 34 34 34 34 34 Fund Iccode 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp AVAILABL 37 AVAILABL 37 AVAILABL AVAILABL 37 AVAILABL 37 AVAILABL AVAILABL AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL AVAILABL 37 AVAILABL 9 71 71 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 53 53 53 53 53 53 53 53 78 76 52 60 Brok Bank

Count Count (CONT.) (CONT.) Maturity Purchase 04/16/2013 04/16/2013 06/19/2013 02/10/2014 02/10/2019 04/16/2018 04/16/2018 06/19/2018 04/10/2014 04/10/2014 04/10/2019 04/10/2019 03/24/2014 03/24/2019 04/23/2014 04/23/2014 04/23/2014 02/26/2014 02/26/2019 04/23/2019 04/23/2019 04/23/2019 06/25/2014 06/25/2019 02/20/2014 02/20/2019 02/04/2014 02/06/2014 02/04/2019 02/06/2019

CUSIP 3136FJ3S8 3136FJY70 3136FJ2V2 3136FJV24 3128X8Q21 3128X8TK8 3128X8TK8 3128X92M1 3128X92M1 3128X92M1 3128X9H52 3136FMXZ2 3128X9W30 3128X9W30 3128X9WU0 Description FNMA CN 080510 FNMA QC 080910 FNMA QC 081910 FNMA CN 082510 FNMA QC 092410 30/360 36 FFCB FHLMC QC 101509 FHLMC QC 101509 061812 FHLMC 1XC FHLMC QC 080310 FHLMC QC 092310 FHLMC QC 070910 FHLMC QC 070910 FHLMC MC 072210 FHLMC MC 072210 FHLMC MC 072210 INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 12926 12943 12973 12993 13375 Type Inv 12096 12097 12227 12917 13069 13127 13128 13167 13168 13169 No. Inv

41 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 78,031.56 31,824.90 67,500.00 35,000.00 109,375.00 156,250.00 125,000.00 130,000.00 130,000.00 650,625.00 7,252,187.50 3,531,250.00 Unrealized Loss Unrealized Unrealized Gain Unrealized 6,096,562.50 5,555.56 58,525.73 160,015.11 62,291.67 124,131.94 SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD 565,104.17 345,833.33 255,902.78 232,638.89 261,250.00 5,900,000.00 227,500.00 288,750.00 264,444.44 Source Price Int Curr Accr 1,339,843.75 1,935,937.50 6,844,694.21 4,247,442.62 1,325,000.00 101.281250 103.531250 100.989811 105.781250 101.843750 100.218750 100.218750 106.281250 100.312500 100.125000 105.875000 100.250000 100.250000 100.250000 100.250000 100.250000 11,816,467.50 Price Market Value Market 111,070,312.50 50,109,375.00 29,098,514.06 50,156,250.00 50,125,000.00 50,125,000.00 50,125,000.00 122,223,437.50 106,935,937.50 50,640,625.00 25,062,500.00 103,531,250.00 20,025,000.00 678,285,944.81 105,875,000.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 11,787,000.00 11,784,642.60 114,971,250.00 19,990,000.00 29,020,482.50 29,035,000.00 99,975,000.00 24,995,000.00 49,995,000.00 49,995,000.00 671,441,250.60 25,000,000.00 Scheduled Book 49,990,000.00 104,973,750.00 20,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 671,638,000.00 115,000,000.00 105,000,000.00 105,000,000.00 105,000,000.00 Sched. Par/Shares 100,000,000.00 100,000,000.00 100,000,000.00 3.7611 3.5231 3.5167 3.1554 3.1250 3.1250 3.1250 3.1304 3.1500 3.2109 3.2555 3.3022 3.4022 3.2544 3.2544 3.7500 3.3500 3.3500 3.3500 3.3500 YTM TR YTM 3.2500 3.2500 3.2500 3.3000 3.3000 3.3000 4.0045 3.2000 3.4000 3.0000 3.0000 4.0000 Coupon 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 39 39 39 39 39 39 Fund Iccode 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp 37 AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL 37 AVAILABL 3 71 31 31 31 31 31 31 31 31 31 31 31 31 31 31 10 10 53 53 53 53 53 53 53 53 53 59 69 69 Brok Bank

(CONT.) (CONT.) Maturity Purchase Count 19 Count 07/16/2013 07/16/2018 01/23/2013 07/01/2014 07/01/2019 01/23/2018 05/12/2014 05/12/2019 05/07/2014 05/07/2014 05/07/2014 05/07/2019 05/07/2019 05/07/2019 02/05/2013 06/26/2013 02/05/2018 04/30/2013 06/26/2018 04/30/2018 05/05/2014 05/05/2019 04/29/2014 04/29/2019 04/30/2014 04/30/2019 06/06/2013 05/06/2014 05/06/2019 06/06/2018

CUSIP 31315PJR1 31315PFR5 31315PCX5 3128X95J5 3128X94U1 31315PDD8 31315PHX0 31315PKD0 3134G1HB3 3128X94K3 3128X94P2 3128X94R8 3128X96P0 3128X96P0 3128X94M9 Description FHLMC MC 072810 FHLMC QC 072910 FHLMC QC 080410 FHLMC QC 070510 FHLMC QC 080610 FHLMC QC 080610 FHLMC QC 080610 FHLMC QC 081110 FHLMC QC 063010 30/360 FHLMC CPN BDS 37 FAMCA FAMCA FIXED FAMCA 071510 SA FAMCA INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 13185 13187 13219 13226 13229 13230 13231 13240 13397 Type Inv FAMCA 11756 11797 12083 FAMCA 12196 12254 12308 No. Inv

42 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 48,437.50 98,100.00 521,437.50 739,687.50 224,062.50 659,250.00 Unrealized Loss Unrealized Unrealized Gain Unrealized 18.48 20.89 BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK 715.47 579.53 658.05 679.06 1,683.30 16,701.39 72,916.67 18,666.67 22,754.03 SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD SUNGARD 158,437.50 194,395.83 149,450.00 226,406.25 Source Price Int Curr Accr 4,683,880.56 27,041,912.50 111,937.00 99,001.00 101.468750 101.906250 101.625000 105.468750 100.968750 104.906250 104.309450 9,017,677.00 3,104,612.00 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 3,832,891.00 5,048,437.50 Price Market 3,637,806.00 15,735,937.50 27,514,687.50 Value Market 3,525,260.00 6,097,500.00 15,220,312.50 12,656,250.00 121,896,616.00 651,934,062.50 100,000,000.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 111,937.00 111,937.00 99,001.00 99,001.00 9,017,677.00 9,017,677.00 3,104,612.00 3,104,612.00 3,832,891.00 3,832,891.00 3,637,806.00 3,637,806.00 3,525,260.00 3,525,260.00 5,999,400.00 11,997,000.00 5,000,000.00 5,000,000.00 6,000,000.00 14,996,250.00 14,996,250.00 121,896,616.00 26,993,250.00 121,896,616.00 15,000,000.00 15,000,000.00 12,000,000.00 27,000,000.00 Scheduled Book 624,892,150.00 Sched. Par/Shares 100,000,000.00 100,000,000.00 625,000,000.00 3.1272 3.1250 3.1602 3.0154 3.1640 3.2555 3.3750 3.0100 3.0554 3.3805 YTM TR YTM 3.2500 3.2500 3.2500 3.0500 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 Coupon 2 2 2 2 2 2 39 39 39 39 39 39 2051 Fund 2079 2083 2083 2039 2059 2054 2049 2064 Iccode 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 53 53 53 53 62 62 62 62 62 62 62 62 62 69 69 Brok Bank

(CONT.) (CONT.) Maturity Purchase Count 12 Count 11/25/2013 11/25/2018 01/21/2014 01/21/2019 01/27/2014 01/27/2019 02/12/2014 02/12/2019 04/27/2014 04/27/2019 07/08/2014 07/08/2014 07/08/2014 07/08/2014 07/08/2014 07/08/2014 07/08/2014 07/08/2014 07/08/2014 08/05/2013 08/05/2018 06/04/2014 06/04/2014 06/04/2014 06/04/2014 06/04/2014 06/04/2014 06/04/2014 06/04/2014 06/04/2014

CUSIP 31315PCL1 31315PFL8 31315PFS3 31315PHE2 31315PKR9 31315PML0 Description 112410 SA FAMCA 012011 SA FAMCA 042611 SA FAMCA 30/360 AGENCIES OTHER 39 REPO RESTRCTED REPO RESTRCTED REPO BAB REPO BAB REPO BAB REPO QZAB REPO QZAB REPO QZAB REPO QZAB INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT FAMCA 12352 12693 12859 12881 FAMCA FAMCA 12949 13176 Type Inv 13305 13306 13307 13308 13309 13334 13335 13336 13337 No. Inv

43 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Unrealized Loss Unrealized Unrealized Gain Unrealized 777.7 43.79 BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK 1,111.11 777.78 728.34 653.34 1,108.33 1,083.33 1,666.67 1,666.67 1,666.67 3,332.03 1,750.00 3,888.89 4,666.67 4,444.44 Source Price Int Curr Accr 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 1,126,090.00 Price Market 3,901,842.00 Value Market 17,850,142.00 3,500,062.00 70,000,000.00 30,000,000.00 20,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 1,126,090.00 1,126,090.00 3,901,842.00 3,901,842.00 17,850,142.00 17,850,142.00 3,500,062.00 3,500,062.00 Scheduled Book 70,000,000.00 70,000,000.00 30,000,000.00 30,000,000.00 20,000,000.00 20,000,000.00 Sched. Par/Shares 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 0.1300 0.1300 0.1900 0.1900 0.2100 0.2100 0.2100 0.2100 YTM TR YTM 0.2400 0.2400 0.2400 0.2400 0.2400 0.2400 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 0.2000 Coupon 2 2 2 2 2 2 2 2 2 2 2 2 8 2081 Fund 2082 2069 Iccode 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 53 53 53 62 62 62 62 62 62 62 62 62 62 62 65 62 Brok Bank

(CONT.) (CONT.) Maturity Purchase 07/17/2014 07/31/2014 07/10/2014 07/10/2014 07/10/2014 07/22/2014 07/24/2014 07/03/2014 07/29/2014 07/29/2014 07/02/2014 07/02/2014 07/08/2014 07/08/2014 07/08/2014 07/08/2014 06/25/2014 06/25/2014 06/25/2014 06/25/2014 06/24/2014 06/24/2014 06/29/2014 06/29/2014 06/29/2014 06/29/2014 06/29/2014 06/30/2014 06/30/2014 06/04/2014 06/04/2014 06/04/2014

CUSIP Description QZAB REPO QZAB REPO QZAB REPO QSCB - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT -OPEN ACT-360 REPO AGREEMENT DOT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 13338 13339 13340 13367 13369 13371 13372 13373 13374 13381 13382 13383 13384 13385 13386 13387 No. Inv

44 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -22.99 Unrealized Loss Unrealized Unrealized Gain Unrealized 2.11 3.67 4.97 0.00 0.00 0.00 0.00 611.11 BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK 777.78 416.67 472.22 375.00 590.24 500.00 1,166.67 80,051.01 SUNGARD Source Price Int Curr Accr 51,183.08 13,608.01 43,873.79 99.831333 121,055.20 307,799.55 535,943.60 585,296.89 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 Price Market Value Market 75,000,000.00 70,000,000.00 106,243,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 51,183.08 51,183.08 13,631.00 13,631.00 43,873.79 43,873.79 121,055.20 121,055.20 307,799.55 307,799.55 535,943.60 535,943.60 585,296.89 585,296.89 75,000,000.00 75,000,000.00 Scheduled Book 70,000,000.00 70,000,000.00 106,243,000.00 106,243,000.00 Sched. Par/Shares 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 100,000,000.00 2,042,846,936.00 2,042,846,936.00 2,042,846,936.00 0.1985 0.1985 0.1700 0.1700 0.1500 0.1500 0.1800 0.1800 0.1800 0.1800 0.3100 0.3100 0.2100 0.2100 YTM TR YTM 0.4300 0.4300 0.2200 0.2200 0.2500 0.2500 0.2500 0.4300 0.4300 0.2500 0.2500 0.2500 0.6500 0.6500 0.2000 0.2000 0.2000 0.2000 Coupon 2 2 2 2 2 2 2 2 75 75 75 75 75 75 75 69 69 69 69 69 69 69 Fund Iccode

200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Safe Purp 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL 60 AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL 60 AVAILABL 2 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 77 77 77 77 77 77 77 53 53 42 62 62 65 65 Brok Bank

(CONT.) (CONT.) Maturity Purchase Count 33 Count 11/11/2014 07/17/2014 08/11/2015 06/11/2013 06/11/2013 06/11/2013 06/11/2013 06/11/2013 07/31/2014 07/13/2014 07/31/2014 07/31/2014 07/31/2014 07/16/2014 07/01/2014 07/01/2014 07/01/2014 07/01/2014 07/01/2014 07/01/2014 12/08/2013 06/11/2023 06/11/2023 06/11/2023 07/02/2014 01/06/2014 01/06/2019 12/08/2023 06/30/2014 06/30/2014

CUSIP Description - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT Repo Overnight - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT - OPEN ACT-360 REPO AGREEMENT 60 REPO OPEN ACT-360 INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 13388 13389 13391 13392 13393 13394 13395 13396 Type Inv 12258 LD-00401 LD-00402 12259 LD-00403 12260 LD-00502 12262 LD-00503 12263 12866 LD-00791 LD-00521 12867 No. Inv

45 Maryland State Treasurer’s 2010 ANNUAL REPORT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -22.99 -22.99 Unrealized Loss Unrealized Unrealized Gain Unrealized 40,388,481.60 1.88 13.01 0.00 0.00 -2.51 -3.70 25.64 BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK BOOK 134.73 -112.74 700.96 5,657.77 5,104.48 -3,116.97 1,846.94 Source Price Int Curr Accr 32,530,901.40 958.93 650.88 1,105.46 32,482.72 314,456.61 99.999201 989,090.31 100.776261 228,450.20 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 2,776,343.35 4,089,122.58 Price Market 2,692,733.99 2,876,300.63 Value Market 275,789,115.91 45,037,005.66 220,844,255.73 5,150,982,431.73 Run Date: 7/14/2010 • 6:03:57PM • Investment Outstanding as of 06/30/2010 Outstanding • Investment • 6:03:57PM 7/14/2010 Run Date: 958.93 958.93 650.88 650.88 1,105.46 1,105.46 32,482.72 32,482.72 314,456.61 314,456.61 228,450.20 228,450.20 989,090.31 989,090.31 2,876,323.62 2,876,323.62 2,776,343.35 2,776,343.35 4,089,122.58 4,089,122.58 2,692,733.99 2,692,733.99 45,037,005.66 45,037,005.66 275,789,115.91 Scheduled Book 220,844,255.73 220,844,255.73 Sched. Par/Shares 5,111,305,375.53 5,110,593,973.12 275,789,115.91 0.1767 0.1767 0.0517 0.0517 0.0518 0.0518 0.0518 0.0518 0.0518 0.0518 0.0518 0.0518 0.3554 0.2078 0.2078 0.0567 0.0567 YTM TR YTM 0.0394 0.0394 0.0289 0.0289 0.0498 0.0498

0.4800 0.4800 0.3000 0.3000 0.3554 Coupon 2 8 8 11 11 11 11 11 11 12 75 75 98 98 98 98 98 98 98 98 98 98 69 69 Fund Iccode 100 100 100 100 100 100 200 200 200 200 200 200 Safe Purp AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL AVAILABL 3 31 31 31 31 31 31 31 31 31 31 31 77 77 23 23 23 23 23 23 23 23 23 25 Brok Bank

(CONT.) (CONT.) Maturity Count 9 Count Purchase Count 10 Count Count 125 Count 07/01/2012 07/01/2012 07/01/2012 07/01/2012 07/01/2012 07/01/2012 02/27/2014 07/02/2014 07/02/2014 07/02/2014 07/02/2014 07/02/2014 02/27/2024 03/06/2017 03/06/2013 06/22/2016 06/20/2017 06/20/2017 06/20/2013 06/20/2013 02/20/2014 06/06/2017 06/06/2013 02/20/2024

CUSIP Description ACT/365-6 CD COMP NEG 75 Balt C BP 2004 Debt Balt C BP 2004 Reserve 4572856 FEDERATED Reserve CTRB 2007 Debt Service CTRB 2007 CTRB 2004 Rebate CTRB 2009 Proceeds CTRB 2009 Debt Servic CTRB 2009 Reserve 98 MONEY MARKET FUNDS INVESTMENT INVENTORY WITH MARKET VALUE WITH MARKET VALUE INVENTORY INVESTMENT 13122 LD-00821 13123 LD-00792 Type Inv LGIP 11456 11457 11458 11460 11461 11462 11936 12197 12228 12229 Type Inv Total Grand No. Inv

46 Maryland State Treasurer’s 2010 ANNUAL REPORT

ACKNOWLEDGEMENTS

Editor-In-Chief Bernadette T. Benik

Editorial Board Judy Smith Barbara Swain

For More Information or Additional Copies Contact:

MARYLAND STATE TREASURER’S OFFICE Attn: Annual Report Treasury Building 80 Calvert Street, Room 109 Annapolis, Maryland 21401

(410) 260-7533 phone (410) 974-3530 fax [email protected] email www.treasurer.state.md.us website

47 Maryland State Treasurer’s 2010 ANNUAL REPORT

Investing for Maryland’s Future

48 Design & Layout: Sandy Janniche Janniche Design, Inc. 0 Maryland State Treasurer’s Office 0

Treasury Building F 80 Calvert Street, Room 109 F Annapolis, MD 21401 phone (410) 260-7533 F fax (410) 974-3530 F email [email protected]

www.treasurer.state.md.us