This report examines possible steps the State of Illinois might take to expand the availability of Medicaid support for services to persons with developmental disabilties. Stressed throughout are the importance of: (1) evaluating whether any given application of Medicaid funding is consistent with the State's goals for persons with developmental disabilties; and (2) establishing the necessary administrative infrastructure at the state and sub-state level to support efficient and effective service delivery. Current utilization of Medicaid to fund developmental disabilities services is outlined and a table compares the percentage of costs of institutional and community-based services for Illinois and other Midwestern states. Noted is that Illinois is well below the national median in amount of federal assistance obtained. The policymaking context in Illinois is then considered. Implications of current Medicaid financing policies are examined for the following: Intermediate Care Facilities for the mentally retarded (financing and compliance with federal standards need to be linked); nursing home reform; the home and community-based waiver authority; optional case management services; early periodic screening, diagnosis and treatment; and other Medicaid services (personal care services, Medicaid rehabilitation and clinic services, and educationally related services). (DB)