The state of Colorado is considering implementing performance-based contracting (PBC) for its community corrections programs, which provide residential supervision and treatment for people convicted of felony offenses. The Colorado Department of Public Safety (DPS) contracted the Urban Institute to develop a set of risk-adjusted outcome measures, a proposed PBC payment model, and an implementation plan for transitioning community corrections program contracts from fee-for-service to PBC contracts. To meet these goals, Urban conducted document reviews, an analysis of administrative program data, a scan of PBC practices, and a survey of and interviews with community corrections stakeholders from DPS, judicial districts, probation and parole, and program managers and frontline staff. Urban recommends that the DPS adopt a PBC model that ties no more than two outcomes to bonus payments and continues to track progress on a broader set of outcomes including scores on the Program Assessment for Correctional Excellence and Core Security Audits. The report details our findings and recommendations regarding risk-adjusted outcome measures, PBC models, and implementation.