Strategies for managing local water supplies and ground-water quality are being formulated and evaluated by the Stanislaus-Tuolumne River Groundwater Basin Association (STRGBA). Management issues in the basin include the proposed use of the ground-water system in the upper part of the basin for storage of surface water, an area in the lower part of the basin that requires drainage, intra- and inter-basin migration of poor-quality ground-water, and efficient management of surface and ground-water supplies. To aid in the evaluation of water management strategies, the U.S. Geological Survey and the STRGBA are developing a simulation/optimization model that consists of a transient model of ground-water flow coupled with optimization tools. The transient model simulates ground-water flow as dictated by aquifer-system properties and annual and seasonal water supply, water use, and land use. The model is being calibrated to water levels measured between 1960 and 2004. Available measured ground-water pumpage values for municipal, irrigation, and drainage purposes are specified in the model, as are deliveries of surface water. Private irrigation pumpage and recharge associated with agricultural land use are being estimated using the new FARM process in MODFLOW-2005, which simulates irrigated agriculture. Hydraulic conductivity values of the aquifer system are constrained using data from more than 3,500 drillers' logs. Water management strategies will be evaluated using the calibrated ground-water flow model and optimization tools that together incorporate the physical constraints of the aquifer system and the institutional constraints imposed by the STRGBA.