(1) A youth agency may establish facilities and programs for the care of public wards. A youth agency shall supervise and operate facilities and programs or contract for the care of public wards, including institutions, halfway houses, youth camps, diagnostic centers, regional detention facilities and treatment centers, group homes, supervision in the community, or other child welfare services.

    (2) A youth agency may utilize the facilities, services, or personnel of any approved agency of this state and its political subdivisions or of any licensed private agency for the care and rehabilitation of public wards. A youth agency may contract with the family division of circuit court for the care and rehabilitation of public wards.

    (3) A youth agency may supervise a public ward placed in private home care.

    (4) A public ward may be placed in any facility, residence, or program described in this section. If the youth agency determines the best interests of a public ward require the involvement of another state or county entity, other than the department of corrections, then the youth agency and that state or county entity shall determine an appropriate care and treatment plan for the public ward. A youth agency may place a public ward in a mental institution under the mental health code, 1974 PA 258, MCL 330.1001 to 330.2106, unless the public ward resides with his or her parents. If the public ward resides with his or her parents, placement in a mental institution requires consent of the custodial parent. If placement in a mental institution occurs, the public ward shall be returned to the youth agency’s custody upon release from the mental institution.

    (5) When necessary, a youth agency may place a public ward in a public or private institution or agency incorporated under the laws of another state or country and approved or licensed by that state’s or country’s approving or licensing agency, provided that the program which the youth agency seeks to place a public ward meets licensing laws, requirements, and rules required for the placement of a public ward with a public or private institution or agency in Michigan. However, if 1 or more appropriate juvenile residential care providers located or doing business in this state have bed space available, the youth agency shall use that space rather than a space available by a provider located or doing business in another state. This requirement does not apply if the provider located or doing business in another state offers a specialized program that is not available in this state. For purposes of placements by the department only, “appropriate juvenile residential care provider” means a private nonprofit entity domiciled in this state that is licensed by the department of consumer and industry services and that entered into 1 or more contracts with the department to provide residential care services for youths on or before the effective date of the amendatory act that added this sentence.