|
| OverviewThe Maryland Prepaid College Trust is a qualified Section 529 Plan
as defined under federal law. The Program's mission is to provide an incentive for
Maryland families to save for a future college education and to reduce reliance on debt. A
purchaser pays into the Program by choosing a tuition plan and payment option, the
Maryland Prepaid College Trust then pools and invests the contributions. The investment
earnings remain in the Trust and are used to make up the difference between contract
payments and actual future college tuition and fee costs.
Program participants can choose from three basic tuition plans. With the University
Plan, a purchaser can buy anywhere from 1-5 years at a 4-year college or university; the
Community College Plan allows a purchaser to buy 2 years at a 2-year college. The third
plan, the Two Plus Two Plan, allows the purchaser to combine the University Plan and the
Community College Plan. The Program offers 5 payment options; this affords the most
flexibility in choosing the best payment plan for each individual purchaser. The Lump Sum
Payment is a one-time payment; the annual payment is a payment made once a year for a
specified number of years. There are two monthly payments: the 5-Year Monthly Payment
allows you to make equal monthly payments over 60 months and the Extended Monthly Payment
allows you to make equal monthly payments until the child graduates from high school.
Purchasers can also make an initial down payment of 30%, 45%, or 60% or choose to make a
significant payment later in the contract.
One of the Maryland Prepaid College Trust's goals is
to provide a flexible program. That is why benefits can be used at public and private
colleges throughout the United States. If benefits are used at a Maryland public college,
the Program will pay the full tuition and mandatory fees; if the benefits are used at a
non-Maryland or private institution, the Program will pay a weighted average of the
Maryland public colleges' tuitions and mandatory fees directly to the institution. This
allows the Program to pay comparable benefits, regardless of where your child attends
college.
Refunds can be requested at any time; the amount of a refund depends on the length of
time the contract has been in existence and the reason for the refund. If the child or
beneficiary decides not to attend college, benefits can be transferred to relatives of the
original beneficiary. Benefits may also be delayed for up to 5 years plus active military
service. Benefits remaining in an account can also be used towards graduate education.
A clear majority of Program participants, 66%, have
chosen the 4-Year University tuition plan, the extended monthly payment plan continues to
be the most popular option, having been selected by 42% of total applicants. In 1999, the
Program added two new payment options: the Annual Payment and Down Payment options. These
new options were selected by 28% of the applicants in the Spring 1999 enrollment period,
although they represent 19% of the total applications for 1998-1999. |
| Contracts The
Maryland Prepaid College Trust held its first enrollment period in Spring 1998. Over
35,000 application booklets were distributed; approximately 1,350 applications were
received resulting in 1,100 contracts. These contracts will result in over $20 million in
contributions to the Program, which represent a committed investment toward future college
expenses.
The Program's second enrollment began in February 1999 and ended June 10, 1999. More
than 55,000 application booklets were distributed; almost twice as many as distributed
during the previous enrollment period. Likewise, the Program received over 2,800
applications, more than double the Spring 1998 enrollment period. These applications will
result in approximately $50 million of additional committed investments toward future
college expenses. |
| LegislationThe Governor and the Maryland General Assembly have passed
legislation during the 1998 and 1999 Legislative sessions that have greatly benefited the
Maryland Prepaid College Trust. In 1998, two tax bills were introduced and passed; the
first instituted a Maryland State tax deduction for contributions to the Program. This
allowed a purchaser to deduct up to $2,500 per year from their Maryland income in years
they contributed to the Program. The second piece of legislation exempts investment
earnings from Maryland State taxation when the benefits are used to pay for college.
In 1999, the Governor and the Legislature improved the tax benefits further by allowing
families with more than one contract to multiply the tax deduction by the number of
contracts that they had purchased. For payments in excess of $2,500 per contract,
purchasers can now continue to take the State income deduction annually until it equals
the total amount of the contract.
Other legislation was introduced in 1999 that helped streamline the procedures of the
Program as well as add more flexibility. Now, any benefits still remaining in an account
after a child has received their undergraduate degree can be used toward graduate
education. One option when there is excess benefits is to request a refund. In this case,
the refund would be reduced in earnings and subject to state and federal taxes. With the
option to use the money to pay for graduate school, a purchaser can continue to use the
money for education and avoid the state and federal tax consequences of a refund.
Legislation was also passed in 1999 to permit District of Columbia families to enroll in
the Program. |
| Marketing The
strategy of the Maryland Prepaid College Trust during the past year and the February -
June 1999 enrollment period targeted the communication channels identified by the Program
to reach the primary and secondary target audiences. Using the demographic profiles of
those who purchased contracts during the 1998 enrollment period, the Program defined the
target audience for the Spring 1999 enrollment period as those parents between the ages of
24 - 49 years old, with children in kindergarten through ninth grade, and household income
levels of $60,000 plus. The target audience resides primarily in the Washington/Baltimore
corridor, as Montgomery County accounted for the largest percentage of applications from
our first enrollment period, followed by Prince George's County, Anne Arundel County,
Baltimore County, Howard County, and Baltimore City.
Using this definition, the Program utilized the marketing channels that have almost
daily contact or interaction with the primary audience: Maryland's public school systems.
The secondary marketing channel needed to reach the primary audience as well as others
interested in purchasing contracts (grandparents, aunts, uncles, employers, etc.). The
dominant resource capable of achieving this objective was advertising on radio,
television, and in newspapers. To reinforce these efforts, a direct mail campaign was
developed to target those who had contacted the Program for information. |
| One-on-One Marketing One of the strongest tools the Program employed in 1998 was one-on-one contact
with potential applicants. This provided the staff with the opportunity to answer
questions and explain the Program’s benefits and details. It also provided Program a
positive human touch, allowing potential purchasers to meet the individuals who actually
administer the Program. During the Spring 1999 enrollment period, the Program took the
one-on-one marketing efforts to a much higher level, conducting over 200 informational
forums at a variety of different venues, including public and parochial schools, shopping
malls, public libraries, fairs, and other public events. The one-on-one marketing effort
culminated with a 10-day statewide "Whistle Stop Tour," where perspective
purchasers could meet with the Program to get last minute questions answered, and submit
their applications before the deadline. The success of this form of marketing is clearly
demonstrated in that 43 percent of the 1999 applications came from people who had some
form of direct contact with Program staff.
Ambassador Program
Utilizing a successful one-on-one marketing tool used by several other states, the
Program instituted the Ambassador Program. This program uses speakers to give
presentations to various groups and organizations at public forums throughout the state.
The Program contacted each public school system to schedule "Parent Information
Nights." The presentations provided parents with an opportunity to get an application
booklet as well as a complete overview of the Maryland Prepaid College Trust. It also
offered answers to the parents' questions.
Informational Booths
Informational booths or display tables were set-up at several major shopping malls on
weekends during the enrollment period. Staffed by Program employees and ambassadors, the
malls provided potential purchasers with a convenient way to get information about the
Maryland Prepaid College Trust within their normal weekend routine. The malls included
Annapolis Mall, White Marsh, White Flint, Owings Mills, Towson Town Center, and The
Gallery at Harborplace.
During the Spring 1999 enrollment period, the Maryland Prepaid College Trust used
informational booths at a variety of different events, shows, and fairs to try to increase
its exposure to as many Maryland families as possible. Prior to and during the enrollment
period, the Program staffed booths at the Maryland State Fair, The Maryland Technology
Showcase, MACO, MSTA Conference, PSASA Fall Conference, Preakness Balloon Glow event, the
Baltimore Woman's Show, Maryland Association of Accountants Conference, and at several
county sponsored forums aimed at parents.
Employee Forums
The Program worked, in conjunction with Governor Parris N. Glendening’s
cabinet, to provide informational sessions, or brown bag luncheon meetings with State
employees. The employees were provided with an overview of the Program and given
application booklets, brochures, and other materials. The Program also worked with several
federal agencies and private sector employers to conduct similar sessions.
As illustrated by the chart above, the Program’s website grew in 1999 to become
the second most popular source of information about the Program, next to television and
radio. The website is already promoted in all Program marketing materials. The
Program intends to emphasize the ease and convenience of using its website to learn about
the Program, get specific questions answered by e-mail, search the schedule of Parent
Information Nights, and print Program Application forms. |
| Radio / Television Advertising To maximize the effectiveness of advertising on radio and
television, the Program developed three new TV commercials and one new radio spot. The
first commercial, Dreams, featured Governor Glendening and Lt. Governor Kathleen Kennedy
Townsend talking with children at a day-care center about their future dreams. The second
spot, Games, featured two women discussing the merits of the Maryland Prepaid College
Trust while children played in the background. A 10-second version of the Games commercial
was produced to stress the June 10th application deadline. The radio spot was
similar to the Games TV commercial featuring two women talking about the Program.
In May, the Dreams spot was retired from commercial television and distributed to all
cable television franchises statewide as a public service announcement. |
| Direct Mail Marketing Maryland State Income Tax Refund Check Stuffer - The Program supplied
the Comptroller's office with 1,000,000 postcards to be inserted in the 1998 income tax
refund checks. The card provided general information about the Program and invited the
recipient to call the toll free telephone number, visit the web site, or mail the card to
the Program to get more information.
New Application Booklet Is Coming - A post card was sent to everyone on the
mailing list from the first enrollment period to let them know that the next enrollment
period was underway and that they would be getting a new booklet in the mail.
New & Improved Tax Benefits - When Governor Glendening signed the new tax
legislation into law on April 8, 1999, a postcard was sent to all potential contract
purchasers on our mailing lists. The same information was also inserted into each
application booklet prior to distribution.
Whistle Stop Tour Newsletter - The Program conducted a tour in 10 different
counties over the last 10 days of the enrollment period to answer last minute questions
and to accept applications. The newsletter was sent to everyone on the Program's mailing
lists, as well as to the members of the Legislature, the news media, and distributed at
Parent Information Nights prior to the start of the tour.
Print Advertising
A concerted effort was also made to reach the targeted audiences through print
advertising. The print campaign highlighted the Program’s major benefits. As the
application deadline approached, the advertisements in several publications were switched
to promote the 10-day Whistle Stop Tour. |
Balance
Sheet - As of June 30, 1999 |
| ASSETS |
|
| Cash
& cash equivalents |
$
978,890 |
|
Investments, at fair value |
6,876,148 |
|
Fixed assets, net |
16,073 |
|
Total Assets |
$
7,871,111 |
| LIABILITIES |
|
| Accounts payable
& accrued expenses |
$
516,764 |
| Loans payable |
370,000 |
| Accrual for
tuition benefits payable |
5,907,834 |
|
Total Liabilities |
6,794,598 |
| Retained
Earnings |
1,076,513 |
|
Total Liabilities and Retained Earnings |
$ 7,871,111 |
See accompanying notes to financial statements
| Statement
of Operations and Retained Earnings For the Fiscal Year Ended June 30, 1999 |
| Revenues: |
|
| Participant
tuition payments |
$ 5,907,834 |
| Application and
other fees |
267,552 |
|
Total Revenues |
6,175,386 |
| Expenses: |
|
| Provision for
tuition benefits payments |
5,907,834 |
| Marketing |
877,104 |
| Salaries, wages,
and benefits |
350,781 |
| Technical and
special fees |
30,411 |
| Communication |
152,155 |
| Travel |
13,465 |
| Contractual
services |
183,891 |
| Supplies |
7,177 |
| Equipment |
1,042 |
| Depreciation |
19,654 |
| Fixed charges |
43,389 |
| Other expenses |
18,267 |
|
Total Expenses |
7,605,170 |
|
Operating Income |
(1,429,784) |
|
Non-operating income: |
|
| Grant from
Maryland Higher Education Commission |
1,290,000 |
| Unrealized gain
(loss) |
782,186 |
| Investment Income |
153,425 |
| Total
non-operating income |
2,225,611 |
| Net Income |
795,827 |
|
Retained Earnings, Beginning of Year |
280,686 |
|
Retained Earnings, End of Year |
$
1,076,513 |
See accompanying notes to financial statements
Maryland
Higher Education Investment Program Statement of Cash Flows For the Fiscal Year Ended June
30, 1999 |
| Operating loss |
$ (1,429,784) |
| Adjustments to reconcile operating loss
to |
|
| Net Cash
Provided by Operating Activities; |
|
| Depriciation |
19,654 |
| Change in assets and liabilities: |
|
| Increase in
accounts payable |
516,764 |
| Increase in
tuition benefits payable |
5,907,834 |
|
Net cash provided by operating activities |
$
5,014,468 |
| Cash Flows from Investing Activities: |
|
| Investment
Income |
153,425 |
| Purchase of
investments |
(6,093,962) |
|
Net cash used by investing activities |
(5,940,537) |
| Cash Flows from Non-capital Financing
Activities: |
|
| Proceeds from
Grant from MHEC |
1,290,000 |
| Proceeds from
Loans from MHEC |
400,000 |
| Repayment of
Loan from MHEC |
(30,000) |
|
Net cash provided by non-capital financing activities |
1,660,000 |
| Cash Flows from Captial Financing
Activities: |
|
| Acquisition of
fixed assets |
(35,727) |
| Net Increase in
Cash |
698,204 |
| Cash at
Beginning of Year |
280,686 |
| Cash at End of
Year |
978,890 |
See accompaning notes to financial statements
| Notes to Financial Statements Year
Ended June 30, 1999
1. ORGANIZATION AND PURPOSE
The purpose of the Maryland Higher Education Investment Program (the Program) is to
provide a simple and convenient way for Maryland families to save for a college education.
It provides for the advance payment of tuition and mandatory fees. A purchaser enters into
a contract for the future payment of tuition and fees for a specified beneficiary. When
the beneficiary enrolls in college, the Program will pay the contract benefits. Following
graduation from high school, the beneficiary has five years plus the number of years
purchased to use benefits. This time period may be extended by any time served in active
military duty. The contract benefits are based on in-state rates for Maryland public
colleges but can be used towards these costs at any accredited, non-profit, private or
out-of-state college.
The Maryland General Assembly created the Program during the 1997 legislative session.
The Program is an independent agency of the State of Maryland, authorized by the Maryland
Code Annotated Education Article, Section 18, Subtitle 19. The Maryland Higher Education
Program Board (the Board) directs the Program. The Board consists of nine members; four of
which are ex-officio members. The ex-officio members are the Comptroller, the Treasurer,
the Secretary of the Maryland Higher Education Commission, and the State Superintendent of
Schools. The five remaining members are public members appointed by the Governor. The
Board established the Maryland Prepaid College Trust (the Trust) to hold the Program's
investments and to be used as the Program's marketing name.
The Program is an independent state agency but, by law, its funds are not considered
moneys of the State and may not be deposited into the Treasury. Funds remaining in the
Program at the end of any fiscal year remain in the Program rather than reverting to the
State General Fund. The State of Maryland does not guarantee the payment of contract
benefits.
Legislation passed in 1998 and 1999 established tax incentives for Maryland residents
participating in the Program. All Program contributions can be deducted from Maryland
State income at a rate of up to $2,500 per contract annually. Earnings on those payments
are exempt from Maryland taxes when used for college. Contributions grow on a tax-deferred
basis at the federal level while in the Program. |
| 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES Basis of
Presentation
The activities operated by the Program are accounted for in an enterprise fund.
Proprietary fund types differ from governmental fund types in that the focus is on the
flow of economic resources which, together with the maintenance of equity, is an important
financial indication. Therefore, the accompanying financial statements presented have been
prepared on the accrual basis of accounting whereby revenues are recorded when earned and
expenses are recorded when incurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from these
estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of amounts maintained in a Program-controlled bank
account, pooled cash maintained by the State Treasurer and overnight investments with
original maturities of 90 days or less. Cash deposits of the Program are made in
accordance with the Annotated Code of Maryland, which requires depositories to give
security in the form of collateral as provided in the Code, for the safekeeping and
forthcoming, when required, of these deposits. As of June 30, 1999, cash in the bank is
fully insured.
Investments
The Program’s comprehensive investment plan (the Plan), authorized by the
Annotated Code of Maryland, allows the Program to purchase investments including domestic
equities, intermediate term investment grade bonds, and other governmental agency
instruments, as well as money market deposits based on the Plan's specified portfolio
allocation. Investments are comprised of mutual fund shares stated at fair market value
based upon quoted market prices.
The Investment Plan adopted by the Board specifies the portfolio allocation, which
considers the investment safety and liquidity characteristics while aiming for the
specified yield targets of the Program.
Fixed Assets
Fixed assets are stated at cost less accumulated
depreciation. Fixed assets are depreciated on a straight-line basis over the following
useful lives: |
Computers |
3 years |
| Furniture |
10 years |
Equipment |
5 years |
| Accrual for Tuition Benefit
Payments The Program's stipulates that in any case where a refund is requested
on a contract that has been in existence for less than three years, the purchaser will
only receive a refund in the amount of their payments into the Program less any
administrative fees paid. Due to the fact that all contracts have been in existence for
less than three years, the accrual for tuition benefits payments as of June 30, 1999
equals tuition payments made by Program participants. After the initial three years, the
accrual will be the actuarially determined liability for future payments for the tuition
payment reserve to date.
The Program’s consulting actuary independently determines the Program's actuarial
present value of future contract payments. The actuarial calculation is based on the
following assumptions as determined by the Program and the actuaries:
Tuition and Mandatory Fee Increases The Weighted Average Tuition
(WAT) for universities and
community colleges is projected to increase 5.5% and 10% per annum for
tuition and fees respectively, based on historical data.
Investment Return The actuarial valuation of the Trust Fund was determined using
an assumed 7.65% rate of return on investments. We further assume the Trust Fund is exempt
from federal income tax.
Enrollment of Program Beneficiaries It is assumed the beneficiaries will
attend college full-time commencing with their expected matriculation date. Contract
beneficiaries are assumed to attend the various colleges and universities in the same
proportion as the headcount information that was used to determine the 1999-2000 BAT with
a 6% bias load added.
Bias Load The assumed bias load is 6% and is based on a credibility
weighted average of the mix of current enrollment statistics and the disproportionate
number of beneficiaries attending more expensive schools. The credibility factor is based
on the number of contracts sold and the contract sales figures needed for full
credibility.
Contract Cancellations It is assumed that 8% of the contracts will be canceled
and is based on cancellation rates of similar prepaid tuition programs. Such cancellations
are attributable to, but not limited to, death or disability, scholarship, out-of-state
enrollment or private university enrollment.
Death and Disabilities Mortality rates for beneficiaries are assumed to follow
the 1990 U.S. Life Tables.
As the Program was started during 1998, it does not have any history to compare to
these assumptions. As the Program operates in the future, it will have more information to
validate these assumptions, and as such, these assumptions may change and the changes may
result in retroactive changes to the estimated accrual for tuition benefit payments. These
changes in the accrual will be accounted for in the period of the change as a change in
estimate. |
| 3. INVESTMENTS The Program's investments as of June 30, 1999 are not subject to
classification by credit risk because the Program owns units of a whole rather than
specific securities which by their nature are not subject to risk categorization. All of
the Program’s investments are in mutual fund shares.
At year-end, the Program's investment balances in mutual funds were as follows: |
| |
Cost |
Fair Value |
Unrealized Gain (Loss) |
| Common Stock Funds |
$4,123,950 |
$4,955,041 |
$831,091 |
| Bond Funds |
1,970,012 |
1,921,107 |
(48,905) |
| |
$6,093,962 |
$6,876,148 |
$782,186 |
| 4. FIXED ASSETS As of June 30, 1999, fixed assets consist of the following: |
| Computers |
$
24,863 |
| Furniture |
6,337 |
| Equipment |
4,527 |
| Total |
35,727 |
| Less: Accumulated
depreciation |
19,654 |
| Fisced assets, net of
accumulated depreciation |
$
16,073 |
| 5. LOAN PAYABLE During fiscal year l998, the Program was granted a loan of
$150,000 from the Maryland Higher Education Commission (MHEC). This loan was not paid to
the Program until fiscal year 1999. Additionally, in fiscal year 1999, the Program was
granted and received an additional loan from MHEC for $250,000. The loans are non-interest
bearing and due June 30, 2003 and June 30, 2004, respectively. |
| 6. PENSION AND
POSTRETIREMENT BENEFITS Eligible employees of the
Program, as employees of the State, are covered under the retirement plans of the State
Retirement and Pension System of Maryland (the System) and are also entitled to certain
healthcare benefits upon retirement. The Program’s only liability for retirement and
postemployment benefits is its required annual contribution, which it has fully funded
during the years ended June 30, 1999 and 1998. These contributions amounted to $19,534 and
$6,118 for the years ended June 30, 1999 and 1998, respectively. The System prepares a
separate audited Comprehensive Annual Financial Report, which can be obtained from the
State Retirement and Pension System of Maryland, 301 West Preston Street, Baltimore,
Maryland 21201. |
| 7. TAX EXEMPT STATUS The Program is exempt from federal taxation in accordance with
Section 529 of the Internal Revenue Code. Additionally, the Program is exempt from State
and Local taxation in accordance with Senate Bill 232, which established the Program. |
| |
| Legislative Audit Section 18-1916 of the Education Article states that the Office
of Legislative Audits shall conduct an annual audit of the Program. The Office
conducted a fiscal/compliance audit of the program for the period from July 1, 1998 to
June 30, 1999. The objectives of the audit were to examine the Program’s financial
transactions (including its operating expenditures), records and internal controls, and to
evaluate its compliance with applicable State laws, rules and regulations.
The audit did not disclose any significant deficiencies in the design or operation of
the Program’s internal control. Nor did the audit disclose any significant instances
of noncompliance with applicable laws, rules or regulations.
The Office of Legislative Audits’ report, which includes the Program’s
response, is available to the public and may be obtained by contacting the Office of
Legislative Audits, 301 West Preston Street, Baltimore, Maryland, 21201, or the Department
of Legislative Services—Office of the Executive Director, 90 State Circle, Annapolis,
Maryland, 21401 |
| August 31, 1999 Mr. Edwin S. Crawford
Chairman, Maryland Prepaid College Trust
217 East Redwood Street, Suite 2050
Baltimore, Maryland 21202
Dear Mr. Crawford:
This report presents the results of the June 30, 1999
actuarial valuation of the Maryland Higher Education Investment Program and the Maryland
Prepaid College Trust (MPCT). The valuation compares the value of the assets of the
program to the value of expected future tuition payments to beneficiaries. The following
pages summarize the actuarial valuation of the trust fund performed by
PricewaterhouseCoopers LLP as of June 30, 1999.
A comparison of the assets and liabilities of the
trust fund shows that as of June 30, 1999 there is a surplus of $4,775,023.
The actuarial valuation was performed based upon
generally accepted actuarial principles, and tests were performed as considered necessary
to ensure the accuracy of the results. We certify that the amounts presented in the
following pages have been appropriately determined according to the actuarial assumptions
stated herein.
Respectfully submitted,
PricewaterhouseCoopers LLP |
| Richard M. Kaye |
Kevin Vesel |
| Fellow of the Society of Actuaries, CPA
Managing Partner, Global Human Resource Services |
Actuary |
| Supplementary Information
Year 2000 Compliance
Certain computer programs have been written using only two digits to define the
applicable year rather than four. This could result in the computer recognizing the date
using "OO" as the year 1900 rather than the year 2000. This, in turn, could
result in major system failures in miscalculations and is generally referred to as the
"Year 2000" problem. The Program commenced a process to assure "Year
2000" compliance of all hardware, software, and ancillary equipment that is date
dependent.
The process of assessing the impact of the Year 2000 issue with respect to outside
vendors is in progress. The Program is in the process of developing a business continuity
plan to ensure that critical business processes continue in the event of any potential
disruption of internal or external systems.
On a statewide basis, the State of Maryland has appropriated funds for fiscal years
1999 and 2000 for Year 2000 contracts for State agencies approved through the State’s
Year 2000 Program Management Office. |
A RTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS
To the Board of the Maryland Higher Education Investment Program:
We have audited the accompanying balance sheet of the Maryland
Higher Education Investment Program, as of June 30, 1999, and the related statements of
operations, and cash flows for the year then ended. These financial statements are the
responsibility of the Program's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Maryland Higher Education
Investment Program, as of June 30,1999, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting principles.
The Year 2000 supplementary information on page 14 is not a required
part of the basic financial statements but is supplementary information required by the
Governmental Accounting Standards Board (GASB), and we did not audit and do not express an
opinion on such information. Further, we are unable to apply to the information certain
procedures prescribed by professional standards because disclosure criteria specified by
GASB Technical Bulletin 98-1 as amended are not sufficiently specific to permit meaningful
results from the prescribed procedures. In addition, we do not provide assurance that the
Maryland Higher Education Investment Program is or will become Year 2000 compliant, that
the Maryland Higher Education Investment Program's Year 2000 remediation efforts will be
successful in whole or in part, or that parties with which the Maryland Higher Education
Investment Program does business are or will be Year 2000 compliant.
The other data included in this Annual Report have not been audited
by us and, accordingly, we express no opinion on such data.
Baltimore, Maryland,
August 20, 1999 |
|