IN ABOUT A DOZEN YEARS, OVER 1,000 GROUP HOMES WERE ESTABLISHED IN THIS COUNTRY UNDER LAW ENFORCEMENT ASSISTANCE ADMINISTRATION AND OTHER AGENCY FUNDING. THE FEDERAL MONEY WAS INTENDED ONLY TO BE SEED MONEY. NOW THAT THE FEDERAL FUNDING IS BEING WITHDRAWN, THESE HOMES MUST TURN TO OTHER AGENCIES, PUBLIC AND PRIVATE, FOR FUNDING REVENUES. THE AIM OF THIS PAPER IS TO PROVIDE ACCURATE FIGURES, AND IT IS HOPED THEREBY TO DEMONSTRATE THE COST EFFECTIVENESS OF THESE HOMES OVER TRADITIONAL INSTITUTIONS. WHILE THE FUNDING TRANSITION HAS NOT CREATED A CRISIS IN ALL STATES, THERE ARE SIGNIFICANT PROBLEMS RELATED TO FUNDING IN MANY STATES. DIFFICULTIES ENCOUNTERED BY WEST VIRGINIA, DELAWARE, GEORGIA, MAINE, NEBRASKA, NEW JERSEY, AND WYOMING ARE BRIEFLY SKETCHED. THE EXPERIENCES OF IDAHO, RHODE ISLAND, MONTANA, WASHINGTON, AND MASSACHUSETTS ILLUSTRATE SUCCESSFUL TRANSITIONS TO STATE AGENCY FUNDING. A TABLE IS PRESENTED LISTING THE COSTS PER-CHILD-PER-DAY OF OPERATING GROUP HOMES IN 34 STATES IN FISCAL YEAR 1976-1977, AND COMPARING THESE COSTS WITH THE MOST RECENT FIGURES (FISCAL YEAR 1973-1974) FOR OPERATING TRADITIONAL INSTITUTIONS IN ALL 50 STATES. THE MEDIAN COST FOR HOMES PER STATE IS ABOUT $20.00 PER-CHILD-PER-DAY, COMPARED WITH APPROXIMATELY $30.00 PER DAY FOR TRADITIONAL INSTITUTIONS. IN FACT, GROUP HOME COSTS MIGHT HAVE BEEN SHOWN TO BE EVEN LESS (HALF) THOSE OF TRADITIONAL INSTITUTIONS, HAD THE COSTS FOR TRADITIONAL INSTITUTIONS BEEN AVAILABLE FOR 1976-1977. THERE IS LITTLE EVIDENCE IN THE 60 GROUP HOME EVALUATION PAPERS STUDIED THAT GROUP HOME PROGRAMS ARE MORE EFFECTIVE IN REDUCING RECIDIVISM THAN TRADITIONAL INSTITUTIONS. BUT THERE IS NO DOUBT THAT COMMUNITY-BASED PROGRAMS ARE MORE HUMANE AND LESS COSTLY THAN INCARCERATION, AND THAT THERE IS LESS DANGER OF PSYCHOLOGICAL DAMAGE TO YOUTHS DETAINED IN GROUP HOMES RATHER THAN IN CLOSED INSTITUTIONS. FOR THESE REASONS COMMUNITY-BASED PROGRAMS WILL CONTINUE TO PROVIDE A POSITIVE ALTERNATIVE TO TRADITIONAL JUVENILE INSTITUTIONS SUCH AS REFORM SCHOOLS. (DJM)