A study was conducted to identify California community colleges with contract education programs; to identify and determine the characteristics of successful programs; and to make recommendations for program development. The study was conducted through a review of the literature, a survey of California community colleges to identify effective contract education programs, and in-depth interviews at selected colleges with contract program administrators to identify effective practices. Conclusions, based on survey responses from 47 colleges with contract education programs and in-depth interviews with 7 program administrators, included the following: (1) community college contract education courses consisted primarily of lower division courses in general education, basic skills, and business and technical courses; (2) courses were designed by the colleges and offered at times and places to meet employer needs; (3) instructors were selected for their up-to-date knowledge and ability to teach in a business setting; and (4) contract education can provide a valuable community service at no cost to the taxpayer and serve as an alternative funding source for the college. The survey instruments and sample contracts are appended. (Author/LAL)