The findings indicate that for each year that the average CANS (Child and Adolescent Needs and Strengths) score at intake increased, the outcomes of children in residential programs improved. As a result of the tightening of placements that occurred year after year, residential care became an increasingly effective treatment method for high-needs children and youth. The study agrees with the findings of Baker et al. (2005) in showing that appropriate length of stay for residential treatment should be, at least in part, a function of the intensity of services available at transition from the residential facility back into the community. Knowing whether children should be transferred to higher or lower intensity programs following an intervention can be used to help evaluate the effectiveness of services. Sequential "step-downs" to lower levels of care implies a system is meeting the needs of children, youth, and families. By avoiding inappropriate and potentially ineffective program admissions, children and youth receive care better tailored to their needs and strengths, and service providers are able to reallocate resources most efficiently. Future research should further examine the effects of system-of-care initiatives on treatment outcome, particularly which elements of certain programs predict length of stay. Study data were collected through the Contract Service Administrator for the New Jersey Department of Children and Families. Data were obtained on 3,170 residents who entered residency between 2004 and 2007. Over a 5-year period, the study examined the trajectories of the residents based on regular administrations of the CANS at admission, at regular intervals, and at transition back into the community. 3 tables, 12 figures, and 28 references