The 1992 reauthorization of the Juvenile Justice and Delinquency Prevention Act of 1974 added Part E, State Challenge Activities, to the programs funded by the Office of Juvenile Justice and Delinquency Prevention. The purpose of Part E is to provide initiatives for States participating in the Formula Grants Programs to develop, adopt, and improve policies and programs in one or more of 10 specified Challenge areas. In focusing on Challenge Activity D, this paper proposes closing down traditional training schools and replacing them with secure settings with capacities of no more than 50 violent juvenile offenders with ratios of staff to youth adequate to provide effective supervision and treatment. The authors discuss the costs and conditions of confinement, classification and separation issues, health care, and safety. Promising approaches for community confinement facilities are also outlined. Appended brief descriptions of 12 secure corrections programs, a 36-item bibliography, 5 resource organizations, and 17 notes