In 1988, a bill was passed authorizing the California Department of Corrections to enter into long term contracts with cities or counties to operate return to custody facilities for housing parole violators and State inmates. Since the passage of this bill, six small cities have contracted with the State to operate RTCs and several other small cities are on file for future consideration. Results of this study show that a properly managed RTC can be a valuable source of revenue for a small city without having a negative impact on the small police department charged with its administration. However, if the chief of police of a small police department fails to develop a strategic plan, win the support of key players, and put into place a plan for managing the transition, the chief may find that the RTC will fail to realize its full potential as a source of revenue and that the police department will be negatively impacted. Appendix and bibliography