Across the United States, for-profit residential facilities in the so-called troubled teen industry are tapping into taxpayer money intended for students with disabilities, according to an Associated Press investigation. Despite increasing scrutiny over safety concerns, the fractured bureaucracy of the special education system allows this funding to continue.
The playbook includes operating on stand-alone contracts with individual school districts and drawing out-of-state students, which dilutes regulatory oversight. Experts say residential centres are also capitalising on a catch-all disability category and relying on a network of educational consultants to generate business.
The Individuals with Disabilities Education Act allows special education money to pay for residential placements, with services determined in a child's Individualized Education Program (IEP). However, most state education departments told the AP they do not track private residential placements, leaving oversight to local school districts.
For example, Calo Programs in Lake Ozarks, Missouri, which has treated children from 30 states, did significant IEP business with Illinois and California in 2025, with special education money paying for at least 24 children. In contrast, only two in-state students have been placed there in the past decade, according to Missouri education officials.
Meg Appelgate, CEO of the nonprofit Unsilenced, said the problem is the lack of standard rules attached to how centres get approved and the lack of transparency when abuse is alleged. “It’s a huge issue,” she said. “It’s simply got too many holes in it and we have to shut it down.”
