Reported are findings and recommendations from the University of Montana's Project on Community Resources and Deinstitutionalization which were derived from interviews with 86 service providers and nine social workers and from surveys of 61 retarded persons and their parents. It is explained that service providers most frequently identified the need for sheltered living arrangements to prevent institutionalization and depopulate the institutions, and that social workers felt community education and greater resources would increase the level of community acceptance. Summarized are parental views on such topics as satisfaction with their child's living arrangement, lack of community services, and confusion over service terminology. Described are recommendations for such service aspects as planning, program development and service coordination (including the need for program goals to conform to the developmental model and normalization principles); advocacy; placement procedures (including participation in decision making by residents and their parents or advocates); and residential services (including development of aggressive program for foster home recruitment). (CL)