IN THE EARLY 1970'S, MASSACHUSETTS COMMISSIONER JEROME MILLER ENACTED A MAJOR REFORM IN YOUTH CORRECTIONS CLOSING TRAINING SCHOOLS AND DIVERTING INMATES TO COMMUNITY-BASED PROGRAMS. TWO UNIQUE CHARACTERISTICS OF THIS REFORM ARE EXAMINED IN DETAIL: THE DIVERSITY OF POPULATION COMPOSITION OF INMATES AND THE DEGREE OF CONTACT ALLOWED BETWEEN YOUNG INMATES AND MEMBERS OF THE FREE COMMUNITY. DATA FOR THE STUDY WERE GATHERED USING PARTICIPANT OBSERVATION AND SURVEY METHODS IN CONJUNCTION WITH 10 INSTITUTIONAL AND 13 COMMUNITY-BASED, GROUP-TREATMENT YOUTH PROGRAMS. FACTOR ANALYSIS, MULTIDIMENSIONAL SCALING, AND HIERARCHICAL CLUSTERING WERE USED FOR INDUCTIVE ANALYSIS. ORGANIZATION CHARACTERISTICS WERE SORTED INTO THESE DIMENSIONS: (1) COMMUNITY CONTACT, (2) EQUALITY, (3) PARTICIPATION, AND (4) SUPERVISION. DISTRICT ELEMENTS OF THE INMATE SYSTEMS ARE ANALYZED INCLUDING INMATE PERCEPTIONS OF STAFF MEMBERS, VARIATIONS AMONG PROGRAMS IN INMATE RELATIONS WITH STAFF MEMBERS, DIFFERENCES IN INMATE SUBCULTURES, DIFFERENCES IN THE STRUCTURE OF RELATIONSHIPS AMONG YOUTH AND THEIR PERCEPTIONS OF ONE ANOTHER, AND VARIATIONS IN PATTERNS OF TROUBLESOME BEHAVIOR. IMPLICATIONS OF THE FINDINGS FOR SOCIOLOGICAL THEORIES AND FOR CORRECTIONAL POLICY ARE ASSESSED, AND POLICY IMPLICATIONS ARE DISCUSSED IN DETAIL. IT IS SUGGESTED THAT HIGH LEVELS OF EQUALITY BE MAINTAINED BETWEEN STAFF AND PROGRAM PARTICIPANTS, AND SPECIFIC MECHANISMS BE BUILT INTO THE ORGANIZATION TO REDUCE INEQUALITY. IT IS ALSO RECOMMENDED THAT COMMUNITY-BASED PROGRAMS BE OF LIMITED SIZE AND THAT CONTROL OVER PARTICIPANTS AND PARTICIPANT ATTENDANCE BE INCREASED BY INTRODUCING SIGNIFICANT VARIATION INTO THE ORGANIZATIONAL STRUCTURE ALLOWING FOR GREATER INDIVIDUALIZATION OF PLACEMENT AND GREATER VOLUNTARISM IN THE PLACEMENT PROCESS. THE APPENDIXES INCLUDE DESCRIPTIONS OF THE 23 PROGRAMS EXAMINED FOR THE STUDY; A SELECTED BIBLIOGRAPHY AND AN INDEX ARE PROVIDED.