North Carolina and the U.S. Department of Justice have asked a federal court to end 14 years of oversight of how the state serves adults with serious mental illness, a move that could change who holds the state accountable for housing and community care.
The joint motion, filed Sept. 11, seeks early termination of the Transitions to Community Living settlement, which was set to end in July 2027. The state says it has met the agreement's major requirements, according to the N.C. Department of Health and Human Services.
"I want to be clear that our commitment to community living is not contingent on a settlement agreement," said N.C. Health and Human Services Secretary Dev Sangvai.
Inside the Joint Motion to End Federal Monitoring
The 2012 settlement followed a federal finding that North Carolina was violating the rights of people with mental illness to live in the least restrictive setting possible by keeping them in adult care homes and other institutional settings. That right is protected under the Americans with Disabilities Act and was reinforced by the Supreme Court's 1999 Olmstead decision.
Under the original agreement, the state committed to providing community-based supported housing for 3,000 people, along with community mental health services, crisis services, and supported employment. The agreement has since been modified six times, North Carolina Health News reported.
State officials say more than 4,150 people now live in stable, community-integrated housing through the program, and that more than 6,700 people have been diverted from adult care homes to community settings through screening and outreach. The program provides housing subsidies, community-based services, peer support, supported employment, crisis services, and help leaving state psychiatric hospitals.
If the court agrees, federal oversight would end, but state officials say services would continue. NCDHHS said it will host a virtual town hall to explain how the work will continue under state oversight and will release details when available.
State Progress Report Versus Reviewer Findings
The settlement's independent reviewer, Marti Knisley, has described a more complicated picture. Her latest annual report, published in January, found that the state failed to meet some major goals, including moving the targeted number of people out of adult care homes and providing some required community-based mental health services.
"Without systemic change, the State will again fall short of meeting this requirement in FY 2026 and likely FY 2027, "Knisley wrote.
"There are areas where the state is improving. There are categories that they are very close to meeting, and there are others where, no, they have not met them," Knisley told North Carolina Health News.
Kelly Crosbie, the state's director of mental health, acknowledged limited resources. She said lawsuits from Disability Rights North Carolina have sometimes been "the only leverage that we have" to secure state funding for the program.
Federal Olmstead Rollback Adds Uncertainty
The motion comes months after the Justice Department rescinded long-standing guidance on how it applies the Olmstead decision, according to a Federal Register notice published in July. The decision itself remains in effect, but the department has taken a narrower view of how it should be applied.
Corye Dunn, an attorney with Disability Rights North Carolina, told North Carolina Health News that the change "does tell us what the administration's plans are." She warned that any state or entity reluctant to comply with integration requirements "may feel emboldened by this move."
Gov. Josh Stein and 17 other Democratic governors urged U.S. Attorney General Todd Blanche in a joint letter not to retreat on Olmstead. "Community integration is not an abstract legal concept," the governors wrote.
Republican state Sen. Jim Burgin said the settlement has not been part of the legislature's budget talks. "Every discussion has been what can we do to help people and to help their issues and to provide better services," he said. The latest state budget includes $97.5 million in state and federal funds for the program in fiscal year 2026-27.
Families Weighing Housing, Services, and Waitlists
The people with the most at stake are adults with serious mental illness who live in, or are at risk of entering, adult care homes or state psychiatric hospitals. Their families often serve as advocates and caregivers.
Without court oversight, the independent reviewer's public annual reports would likely end. Families would then rely on state reporting, legislative budget decisions, and advocacy groups to track progress, which raises a fair question about who will publicly measure whether the state keeps its commitments.
Related disability services face long delays. More than 21,000 North Carolinians are on the waitlist for the state's Innovations Waiver, which serves people with intellectual and developmental disabilities, with an average wait of more than 12 years, according to the state's waitlist dashboard. Advocates also worry that federal Medicaid cuts could strain community services.
Families seeking help can contact their regional LME/MCO, the local managed care organization that coordinates public mental health services, to ask about Transitions to Community Living eligibility. Signs that a loved one may be in crisis include withdrawal, not eating or sleeping, confusion, or talk of self-harm. The 988 Suicide and Crisis Lifeline is available by call or text 24 hours a day.
The court has not yet ruled on the motion. Its decision will determine whether federal accountability ends early and whether the state's promise to continue the work on its own will be enough for the people who depend on it.
Key Questions Answered
What did North Carolina and the DOJ ask the court to do? End federal oversight of the 2012 Transitions to Community Living settlement before its scheduled July 2027 end date.
What did the settlement require? Community housing and services so adults with serious mental illness could live outside adult care homes and institutions, including crisis services and supported employment.
Has the state met its goals? The state says it met major requirements and has housed more than 4,150 people. The independent reviewer found some key requirements unmet.
Will services stop if oversight ends? State officials say services will continue under state oversight, with $97.5 million budgeted for fiscal year 2026-27.
Where can families get help? Through their regional LME/MCO or, in a crisis, by calling or texting 988.
