Known for its decades of treatment of juvenile offenders from across the state, The Hills Youth and Family Services will cease its Duluth operation July 2.

The announcement Monday came a week after the organization closed its facility for mental health services in East Bethel, Minnesota, citing pandemic repercussions and a lack of state financial support.

Formerly known as Woodland Hills, The Hills Youth and Family Services is a 140-acre juvenile residential treatment facility located in the Woodland neighborhood of Duluth. It provided trauma-informed programming for at-risk youth and their families, including free after-school care, youth mental health services and residential treatment for adolescents in the justice system.

"This is an unfortunate outcome that no one wanted and a devastating blow to children’s mental health services in Minnesota," said Leslie Chaplin, chief operating officer. "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 Hills in Duluth currently has 34 young people in residential treatment and 99 employees on its payroll, it told the News Tribune.

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On the crest of the pandemic in March 2020, The Hills opened the new location in East Bethel. Dubbed "Cambia Hills of East Bethel," the $26 million, 60-bed facility opened to pandemic restrictions that limited the number of patients it could serve.

What had been the future of the organization then turned albatross, in part, Chaplin said, after rate increases the cost the state of Minnesota pays to house people on treatment waivers failed to materialize.

"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," Chaplin said. "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."

In 2018, The Hills in Duluth was sued over the alleged sexual abuse of several boys in its care. A confidential settlement was only recently reached in the lawsuit.

For the time being, The Hills' community programs, including a free after-school program in the Central Hillside neighborhood, will continue to operate.

"We are making every effort to secure the support of the Duluth and surrounding communities and find new operators for these important programs prior to July 2," Chaplin said.

Chaplin used the news release to reflect on the history of the organization, calling it "one of success, resiliency, integrity and hope."

"Since its founding as an orphanage in 1909, countless lives have been changed for the better within our walls and throughout our community," Chaplin said. "As we close our doors, we reflect on the success of our alumni and the unwavering hope and opportunity that our organization has offered to so many youth and families. Our legacy will live on through the youth we’ve served and the staff who began and cultivated their careers here, many of whom are now industry leaders throughout the country."