The Hills Youth and Family Services, including the Woodland Hills residential juvenile justice program, will cease operations on July 2 due to financial issues.

Leslie Chaplin, CEO of The Hills Youth and Family Services, announced the decision on Monday.

"Our organization took a substantial risk to help more children in need of mental health services by opening an additional location in East Bethel, MN, a year ago. Unfortunately, due to extraordinarily high fixed costs, the state’s inaction on rate adjustments and the fallout from the COVID-19 pandemic, the East Bethel facility and The Hills faced an insurmountable financial burden. We have pursued every avenue available to us to find a viable financial solution, but time and our options have run out and we must close the facility," Chaplin wrote.

The East Bethel facility had opened in March 2020 but closed its doors on June 11, 2021, due to financial issues. The Hills says though the state had actively pushed for such facilities to open, payments from the state were not enough to cover costs and the Department of Human Services would not give a rate increase.

Woodland Hills, which has been open since 1909, currently has 34 residential youth.

"This is an unfortunate outcome that no one wanted and a devastating blow to children’s mental health services in Minnesota. Our focus now is to ensure the children in our care are transitioned in the best possible manner to new placements that will meet their needs. The dedicated staff at The Hills will continue to provide quality care throughout the transition," Chaplin wrote.

The Hills' community programs, including day treatment sites and the Neighborhood Youth Services after-school program, will continue to operate as The Hills looks for new operators to run the programs.

The Hills has 99 employees but says it has seen staffing shortages and has had to turn away children due to the issue. The organization says billable rates set by the state are not high enough to pay a competitive wage.