The Minnesota Department of Human Services (DHS) is moving to close or convert dozens of state-run group homes and job training programs for people with disabilities, in an effort to slash millions of dollars in spending on services that state officials say can be provided by the private sector.

The move marks a historic shift away from an institutionalized model of care for hundreds of people with cognitive and other disabilities who are currently housed in state-operated group homes scattered across the state. Many of these adults could receive comparable care in private group homes, providing significant savings to the public, say state officials.

The state has identified 48 group homes, from Owatonna to Duluth, that are likely to close or be converted to facilities for people with high needs who cannot be cared for in private settings, according to an internal DHS memo obtained by the Star Tribune. Some of these homes could become placement sites for people with mental illnesses, helping to alleviate the state's severe shortage of psychiatric beds.

Though the changes will roll out gradually over the next two years, some families of disabled residents already worry about the consequences for their loved ones.

"We're worried that our children will be forgotten," said Elizabeth Taylor, 71, of Duluth, who has a daughter with Down syndrome living in a state-run group home in Hermantown, Minn.

Taylor said she fears her daughter might end up at another group home "hundreds of miles away," making it impossible for her to visit her daughter once a week or to take her on regular outings for lunch and to the shopping mall. "If I don't have my Katie close to me, how am I going to keep a relationship with her?" Taylor asked.

Likewise, Steven Gibson, 68, of Woodbury fears his daughter Shaan Gibson, 44, who is severely disabled from a traumatic brain injury she suffered as a teenager, will be forced into a nursing home. Gibson said his daughter would fall into a "deep depression" if she is forced to move from the state home where she has lived for the past 20 years.

There, her bedroom is adorned with the comforts of home, including photographs of her high school class and the dolls she collected as a girl. "It's her home, and she feels strongly that she wants to stay here," Gibson said.

The closures come nearly six years after the Legislature, hoping to rein in Medicaid spending, imposed a moratorium on new four-person group homes, also known as corporate foster care. That created a lasting shortage of group-home beds for disabled adults in some parts of the state, with families often waiting months for placements.

But DHS officials say they can no longer afford to operate an expensive network of more than 120 group homes and vocational programs in the face of a daunting, $19 million shortfall in the state's overall budget for vulnerable populations. A detailed plan has not been worked out, but the 48 targeted homes could be closed, transitioned to private owners or converted to new uses, DHS officials said.

"The system is not sustainable," Deputy Human Services Commissioner Anne Barry said in an interview this week. "We are serving people who do not need a safety-net level of care, and that's not acceptable."

The state's role in operating group homes for people with disabilities dates back more than 30 years, and is widely seen as a relic of a more segregated and institutionalized model of care that has fallen out of favor. In the mid-1980s, as state officials shuttered large treatment centers for people with mental illnesses and disabilities, they reached a deal with public employees' unions to maintain a network of smaller group homes, closer to communities, for people with significant disabilities who needed long-term care. The state also agreed to provide vocational support for disabled people at job sites.

At last count, the state operates 126 group homes with the capacity for about 500 people, as well as 19 vocational sites for people with disabilities. Last year, the cost topped $95 million — the largest budget item in DHS's direct care and treatment division for vulnerable populations.

In recent years, however, the state's role in operating group homes has come under fire from several quarters. In 2013, the state's legislative auditor found that services in the state-run homes were duplicated in the private sector, which already operates more than 4,700 group homes in Minnesota. About half the residents of state-run homes could be served by private facilities, the legislative auditor found.

More recently, disability advocates have raised concerns that many people in group homes live an overly sheltered and segregated existence and could be living in their own homes or communities. In addition, Minnesota is under federal court pressure to comply with a 1999 federal court case, known as Olmstead v. L.C., that prohibits states from keeping disabled people in segregated settings if less-segregated alternatives are available.

The state's latest move represents the "second wave of deinstitutionalization," following the closure of large treatment centers in the 1980s, said Barb Turner, chief operating officer at ARRM, a South St. Paul-based association of disability providers and advocates.

"We've been saying for 20 years, 'Hey, we can serve this person,' " in the community, Turner said. "Why are they being served by the state?' "

Some of the state-operated homes could be turned into residences for people with mental illnesses, reducing severe bottlenecks at state mental hospitals in St. Peter and Anoka. At the Anoka-Metro Regional Treatment Center, for example, the state's second largest psychiatric facility, about 30 percent of the patients are awaiting discharge but no longer need hospital care.

"This provides a release valve," Barry said.

Staff writer Glenn Howatt contributed to this report.