Mental health services for children and adolescents from the states' perspective is the topic of this document. The introduction provides statistics on mental health service needs and utilization in this population, while highlighting underserved needs. The history of mental health services provision and funding is traced from isolated state hospitals, to community programs, to coordination of service systems, and finally, because of restricted financing, back to traditional residential care. It is noted that states are responsible for over 90% of expenditures. The lack of service coordination is presented. Barriers to appropriate service delivery are discussed including economic disincentives and crises orientation. General legislative guidelines for state legislatures to follow in establishing a continuum of care for children are given for the areas of prevention, non-residential, and residential services. Specific state legislation is summarized. Future trends and implications are discussed. The major implication is that children with emotional disorders who do not receive treatment grow up to be disabled adults. A five-page case study of Kentucky is presented. Ten references are listed. (ABL)