Report finds disability funds going to for-profit teen homes

A nationwide investigation reveals that taxpayer funds intended for students with disabilities are being channeled to for-profit residential facilities within the "troubled teen" industry, often with minimal oversight. These facilities, which claim to treat severe mental and behavioral health issues, are securing contracts with individual school districts and enrolling students from out of state, effectively diluting regulatory scrutiny.

The funding mechanism is rooted in the federal Individuals with Disabilities Education Act, which allows special education money to pay for residential placements. Services are determined in a child's Individualized Education Program, or IEP, funded by a mix of local, state, and federal dollars. However, oversight is fractured. When asked, most state education departments said it is solely the responsibility of local school districts to ensure funds are used properly. Many states do not track private residential placements, especially for students sent out of state.

A study commissioned by California legislators in 2022 found only half of states have a certification process for such facilities, and few require on-site visits. Most state policies...