DULUTH – A longtime residential juvenile justice and youth treatment facility in Duluth will close July 2, displacing 34 kids and 100 employees.

Closure of The Hills Youth and Family Services comes on the heels of last week's abrupt announcement that its new mental health treatment facility for high-risk adolescents — Cambia Hills of East Bethel — would close within days.

CEO Leslie Chaplin cites high fixed costs, the COVID-19 pandemic and state payments too low to continue operating.

"I did think it was fixable, and then it obviously wasn't," said Chaplin, who became chief executive of the Hills in March.

The East Bethel facility, which has struggled since opening during the start of the pandemic and has been cited by state regulators for licensing violations, did not receive a requested rate increase from the Minnesota Department of Human Services (DHS) to continue operations, Chaplin said, impacting the entire organization. DHS funds most of the care provided at Cambia Hills as private insurers generally do not cover most stays at the facility.

Losing the Duluth center is a blow for local families who need its mental health services and who will have to travel farther away from home to receive them, said Paula Stocke, deputy director of St. Louis County's public health and human services division. A handful of kids from St. Louis County are placed in The Hills' residential mental health program.

"We have complex behavioral health situations where it's not safe for kids to be at home," Stocke said, and already a shortage of available beds. The closure "puts pressure across the system for hospitals, schools, residential settings and, most importantly, children and their families who are at a crisis point," she said.

Space is also limited for juvenile correctional placements, said Ben Stromberg, head of public health and human services for the St. Louis County Attorney's Office.

"Every time you take one of these options away the inevitable downstream impact is going to be more juveniles in the adult system," he said.

The residential facility in the Woodland neighborhood of Duluth is licensed for 50 beds between its juvenile justice and mental health programs. The 34 kids who must be placed elsewhere came from all over Minnesota and Wisconsin, Chaplin said, and The Hills is coordinating with probation officers and social workers on finding them new services. All 17 kids at the East Bethel facility have been placed elsewhere or sent home if they were near discharge, she said.

The Hills in Duluth has 40 children in day-treatment programs, and hopes to continue those and the community-oriented Neighborhood Youth Services, Chaplin said, ending only the residential portion. Both day and community programs are funded differently from the residential program.

Teachers from the Duluth school district instruct both residential and day-treatment students at Rockridge Academy, a district-owned school in the Lakeside neighborhood. The Hills is a few years into a 15-year lease agreement with the district for the building's use. Chaplin expects to keep that in place for its kids in day treatment, and serve an additional 25.

Duluth Public Schools Superintendent John Magas said Thursday that the expansion could lessen the impact on district employees who work at the school.

"We are delighted to know we will continue to have high-quality mental health support" for students in nonresidential programs, he said.

The Hills, formerly known as Woodland Hills, has operated since 1909.

Jana Hollingsworth • 218-508-2450