State-run institutions will soon be a relic of the past in Georgia under a landmark settlement reached Tuesday that could serve as a model for similar efforts in other states, Justice Department officials said.

Under the agreement, Georgia will stop admitting individuals with developmental disabilities to state hospitals by July 1, 2011. What’s more, all those currently living in such facilities will move into the community by July 1, 2015.

The settlement comes in a lawsuit filed by the Justice Department in January alleging that Georgia was in violation of the Americans with Disabilities Act and specifically the Supreme Court’s decision in Olmstead v. L.C., which favored the option of living in the community whenever possible.

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“It is the most comprehensive settlement that the department has ever reached in an Olmstead case and we will use it as a template for our enforcement efforts across the country,” Thomas E. Perez, assistant attorney general for civil rights, said in announcing the agreement. “It addresses the needs of people who are currently institutionalized who don’t need to be there and it also addresses the needs of people who are in danger of institutionalization.”

Under the agreement Georgia will establish 750 home and community-based waivers by July 2015 to help those with developmental disabilities who are currently living in institutions transition into the community. In addition, 400 new waivers will assist individuals who are already living in the community so they can remain there.

Those who receive waivers will be able to choose whether they want to live in their own home or with a family member and they will get help from the state to obtain medical, social, educational and other types of supports.

Beyond assistance for individuals, the settlement calls for Georgia to provide support to 2,350 families currently caring for a person with a developmental disability in their home through respite and other services by 2015. Crisis supports will also be put into place by 2012 in the form of six mobile teams prepared to come to individuals who are in need anywhere in the community. What’s more, the state will create 12 crisis respite homes by 2014.

Perez called the changes the right thing to do legally, morally and financially and said he wants other states to follow Georgia’s lead. It costs an average of $174,000 a year to house a person in an institution versus $47,000 to assist them in their home, he said.

Despite the changes, the settlement will not completely end institutionalization in Georgia. While there will no longer be any state-run institutions after July 2015, private facilities in the state may continue to operate to serve those “who don’t meet the framework of Olmstead,” Perez said.

In addition to changes for those with developmental disabilities, Georgia will also expand community options for residents with mental illness under the agreement.