NOTE 12

DEFERRED COMPENSATION PLAN

Government Employees’ Deferred Compensation Plan (GEDCP) is a deferred compensation plan created by the State in accordance with Internal Revenue Code Section 457. The plan is available to all employees of the State and permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. There are approximately 800 members in the GEDCP at June 30, 1995.

GEDCP benefits depend solely on amounts contributed to the plan plus net investment earnings. Employees are eligible from the date of employment. GEDCP operates without cost to or contribution from the State (the employer) except for the incidental expense of administering the payroll salary deduction and the remittance thereof. Employee contributions are limited to 25% of annual salary or $7,500 per year. Participants are fully vested in their contributions initially and the related net investment earnings. Plan assets, which are included in agency funds, are stated at market value, and are approximately $4.5 million at June 30, 1995.

All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are solely the property and rights of the State, subject only to the claims of the State’s general creditors. Participants’ rights under the plan are equal to those of general creditors of the State in an amount equal to the fair value of the deferred account for each participant.

The State has no liability for investment losses or changes in asset values under the plan, nor does the State have the duty of an ordinary prudent investor. Investments are managed by the plan’s trustee under one of several investment options, or a combination thereof. The choice of investment option(s) is made by the participants.