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The group home is a relatively recent phenomenon in community corrections. Group homes came into prominence in the 1970s. Group homes replaced asylums, orphanages, and other institutions that were shut down either for abuse or lack of funds. There are many types of group homes for many different social problems, including alcohol and drug abuse, mental illness, juvenile delinquency, emotional abuse, and domestic violence. Group homes are primarily private, nonprofit entities even though a few public group homes exist. States may partially fund even private group homes through state programs, in an attempt to avoid incarceration of either the mentally ill or juveniles. There are both short-term group homes and long-term group homes that offer residential care. Costs for such facilities are usually covered through supplemental security income (SSI) payments, and the group home makes sure the person is fed, sheltered, and clothed adequately.

Although group homes vary in size and in types of individuals they allow, the largest group homes usually house no more than 12 persons. There are two main ways people are supervised in group homes: either through caregivers who work in shifts or by means of live-in caregivers. According to Jake Terpstra, shift care has been more successful than in-home residential care, because the intensity of the responsibility is easier for the caregiver to sustain if he or she can get away from the home and have time to rest. Live-in caregivers must maintain their professionalism constantly and have no place to go or to feel comfortable or vent the frustrations they may encounter on the job; hence, live-in caregivers are more prone to burnout as well as lapses of professionalism while on the job.

Group homes offer both benefits and risks. One benefit is that families of offenders may be relieved and comforted by no longer having to provide primary care for the offender, whose behavior they may not be able to handle physically, mentally, or both. Moreover, group homes tend to cost less than other options, such as housing in a correctional facility or mental institution. Group homes can also provide rehabilitation, allowing offenders to live their lives in the context of other persons with past difficulties; hence the former offender's problems are no longer a stigma, because a responsible group home ensures that all people living there are in a community environment.

A group home is a less expensive option to placement in a correctional facility or mental institution; however, juveniles in group home settings often feel abandoned and isolated and experience low self esteem.

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According to a RAND Corporation study, in 1994 every dollar spent on treatment in group homes led to a 7.46 percent reduction in crime-related spending and lost productivity. However, a study done at the University of Illinois by Joseph Ryan and colleagues indicates that juveniles who are in group homes are 2.5 times more likely to enter the juvenile justice system than are children from similar backgrounds. Likewise, blacks tend to be placed in group homes at higher rates than whites. According to a study done by Lori Grubstein for Temple University in 2000, the recidivism rate for teens leaving group homes in Philadelphia was only 22 percent per year after leaving. She also found higher rates of self-esteem, a stronger attachment to teachers, and more community involvement.

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