During the past ten years there has been an emerging consensus that attention must be given to the growing number of troubled children and the lack of appropriate treatment resources for them. The result has been a paradigm shift in social policy from an institutional-based service system to a family-centered, community based system of care. This policy shift has caused a change in the characteristics of children in residential treatment as well as a change in expectations of treatment providers. This paper describes the public policies pertaining to residential treatment of children and adolescents and how they developed, and then raises questions regarding their implementation.