The study identifies 19 issues, analyzes each, and makes recommendations to establish a standardized cost system and a reimbursement rate amenable to annual update. The methodology describes a model facility for which reasonable costs are determined by examining U.S. Labor Statistics and U.S. Department of Agriculture, U.S. Department of Housing and Urban Development, California Board of Equalization, and other similar State programs' cost data, as well as the reported costs of the 14 re-entry work furlough facilities operating during July-December 1981. Geographic and facility size differentials are recognized. It is recommended that a 90 percent average occupancy be assumed, along with the adoption of a weighted average per capita rate of $24.96 per day effective July 1, 1983, for all costs but facility lease/use cost. A higher rate is recommended for smaller facilities. The rate proposal allows for geographic differences according to the Consumer Price Index and the Bureau of Labor Statistics' area wage surveys. Further, it is recommended that the rate be updated annually by the percent change in the Consumer Price Index for comparable operating costs and by the percent changes for benchmark classes in the Bureau of Labor Statistics' seven major area wage surveys in California. Also, it is proposed to add an appendage to the rate for facility lease/use costs containing a rent ceiling based on the Board of Equalization's gross income multiplier of 5.93, a measure of market expectations for rental values. An additional monthly payment is recommended for facilities having a high level of resident employment. The appendixes provide extensive data and information relevant to the study. (Author summary modified)