Rather than having a traditional, municipal police department nearly 30%of the 478 cities in California contract with their county sheriff for police services. The usual rationale is that contracting with the sheriff costs less than establishing and operating a city police department. This research investigates this issue by analyzing expenditure, crime, and other relevant data covering the 5-year period 2001-2005. It poses and answers the following questions: (1) Are the cities that contract (contract cities) similar to the cities that have their own police departments (department cities) on a range of characteristics that may affect the cost of policing? (2) Do statewide data show the claimed cost differential? (3) Are there differences in comparative costs between or within regions and counties in the state? and (4) Does contracting cost less because of less effective policing as measured by percentages of violent and property crimes cleared? Contract cities are newer, less populous, less dense, wealthier, have less business activity, have lower numbers and rates of reported crime, and have fewer arrests. It is suggested that there is less police work in the contract cities, and that may affect cost. Mean annual per capita police expenditures are much lower in the contract cities statewide, in both the northern and southern regions, and in three of the four southern California counties where contracting is most prevalent. Finally, contract cities have on average significantly higher clearance rates for violent crimes than department cities (especially in Los Angeles County) and the same clearance rates for property crimes. It does not appear that contract cities are paying less because they are getting lower quality police service, at least as measured by crime clearances. Suggestions are made for further research on the contracting phenomenon. [ABSTRACT FROM PUBLISHER]