One difficult issue the Minnesota Legislature didn’t resolve centers on children’s mental health. State lawmakers didn’t fix a looming problem that affects children’s mental health. Almost a dozen residential treatment centers for children with serious mental illness could lose $4.5 million annually in federal funding. Hundreds of Minnesota young people could be affected, starting next year.

Effective May 1, 2018, the federal Centers for Medicare and Medicaid Services (CMS) stopped funding for the children’s residential mental health facilities after a review. A Minnesota Department of Human Services review determined that the facilities are classified as “institutions of mental disease.”

Federal law dating from the 1960s dictates that Medicaid cannot fund any facility that falls under that definition. The law affects facilities with more than 16 beds, where more than half of the people are being treated for a mental illness or substance use disorder. After a CMS-ordered review the state reclassified 11 facilities.

The National Alliance for the Mentally Ill (NAMI) Minnesota points out that with the revocation of the state’s longstanding exception for children’s residential treatment, 580 children’s residential mental health and substance use disorder beds in 11 facilities will lose a crucial source of funding. Advocates say the facilities are badly needed, to help children and youth stabilize their lives.

State lawmakers anticipated the federal decision and appropriated state funding to compensate for lost federal dollars in the 2017 session. But that money is only available through April 30, 2019. Unless the legislature acts, counties must bear 100 percent of the costs after that date.

Extending the coverage to the end of the biennium, on June 30, 2019, would have cost the state $791,000. The proposal ultimately didn’t make it through in 2018, even though it would have only cost $791,000.

“Children with a mental illness and their families rely upon residential facilities for intensive treatment,” said Sue Abderholden, “The counties lack the resources to fund 100 percent of the costs for this vital part of our continuum of care.” NAMI Minnesota hopes to work with state leaders to stabilize the children’s mental health system and develop a long-term plan for children’s residential mental health treatment.

Residential mental health treatment facilities for children are in high demand. State officials have estimated that there are about 109,000 children who live with serious mental illness.

Minnesota has recently lost needed beds and is losing more. Last year the St. Cloud Children’s Home was shot down after state regulators raised red flags about its operations. That eliminated 60 beds.

This year Catholic Charities of St. Paul and Minneapolis that it is closing its 30-bed residential treatment program at St. Joseph’s Home for Children in Minneapolis. NAMI has called for state lawmakers to authorize an additional 80 psychiatric residential treatment facility to address the current shortages. State officials have estimated that more than 300 children must go out of state for treatment annually.