The document states the future direction of the Pennsylvania Office of Mental Retardation in planning and policy development for residential programs. Section I provides an overview, traces the history of residential services in Pennsylvania, and describes the residential system in Pennsylvania as of June, 1978. Section II outlines a continuum of services (from independent living to institutional living) and considers anticipated and desired trends in residential program development. Consideration is given to independent living; family care homes; community living arrangements; interim care facilities; private licensed facilities; and state centers, mental retardation units, and contracted facilities. A final section offers recommendations for future action in the following areas: changes in law, regulations, and funding patterns; needed planning initiatives; program development strategies; improved program accountability; increased staff development capability; and provision of community education. (SBH)