UNDER THE REORGANIZATION, PRISON, PROBATION, AND PAROLE FIELD SUPERVISION RESPONSIBILITIES WERE COMBINED IN A NEW AGENCY, AND DIRECT SERVICE DELIVERY WAS REGIONALIZED. DURING THE REPORTING PERIOD, 3 NEW CORRECTIONAL INSTITUTIONS TOTALING 1,543 BEDS WERE OPENED, TOGETHER WITH A NEW 112-BED DORMITORY AT AN EXISTING INSTITUTION. PLANS TO ESTABLISH THREE NEW COMMUNITY CORRECTIONAL CENTERS AND TO FURTHER EXPAND INSTITUTIONAL CAPACITY WERE MADE. THREE OF THE DEPARTMENT'S 15 MAJOR PROGRAMS--FOOD SERVICE, INDUSTRIES, AND CLASSIFICATION--WERE EVALUATED COMPREHENSIVELY. THE STATE LEGISLATURE PASSED A LAW ESTABLISHING A MUTUAL PARTICIPATION PROGRAM, WHICH ALLOWS INMATES, THE PAROLE AND PROBATION COMMISSION, AND THE DEPARTMENT TO AGREE UPON SPECIFIED INSTITUTIONAL AND PAROLE PLANS AND ON PREDETERMINED PAROLE DATES. THE REPORT NOTES THE GOALS AND OBJECTIVES OF THE DEPARTMENT, DESCRIBES THE REORGANIZATION, IDENTIFIES MAJOR PROBLEMS DURING THE YEAR, AND OFFERS RECOMMENDATIONS FOR ADDRESSING THE DEPARTMENT'S NEEDS. EACH REGION REPORTS ON THE STATUS OF ITS INSTITUTIONS AND COMMUNITY FACILITIES. ALSO INCLUDED ARE REPORTS FROM THE DIVISIONS OF THE STATE OFFICE. A FINANCIAL REPORT, INCLUDING DATA ON CONSTRUCTION COSTS, IS PROVIDED. THE REPORT CLOSES WITH STATISTICS ON THE CHARACTERISTICS OF INMATES AND OFFENDERS UNDER COMMUNITY SUPERVISION, AND CORRECTIONAL CASELOAD PROJECTIONS THROUGH 1980. (LKM)