In the large meeting room in the mental health living unit at the Chaderjian Youth Correctional Facility near Stockton, counselor Jason McDaniel is leading what's called the "morning check in." Seated around him are half a dozen young men, all convicted of felonies as juveniles.

McDaniel encourages them to reflect on the elements of success – or failure. He turns to a slouching, heavily-tattooed inmate and asks him about the obstacles in his life that led to prison.

"Drugs, gangs, parties, girls," he replies with a rueful smile.

The average age of the men is 19 – and they have all have committed serious crimes, ranging from rape to carjacking to murder, says Superintendent Mike Minor.

In addition to group counseling, CHAD, as the lock-up is known, offers a full range of rehabilitative services, including mental health and substance abuse counseling, education and vocational training.  Those wrap-around services are the result of a 2004 legal settlement that forced California to address poor conditions – and widespread abuses – in the state's youth prisons.

A decade and a half ago, the state's Division of Juvenile Justice – then known as the California Youth Authority – incarcerated 10,000 young offenders. But the lawsuit, brought by the Prison Law Office and other advocates, forced dramatic changes in the treatment of teenagers who've run afoul of the law.

At the same time, state leaders with scarce funds have become increasingly eager to trim their tight budgets. County governments have taken on an increasingly large role in rehabilitating teenage offenders. And the state's five facilities, including CHAD, now house just 1,200 inmates, referred to as wards in the juvenile justice system.

Early this year, Gov. Jerry Brown suggested that California become the first state in the nation to shut its youth correctional system completely and turn over the remaining wards to the custody of counties. Local officials pushed back, and Brown responded with a compromise plan. But his goal remains: slash tens of millions of dollars from the state's general fund obligations by turning over juvenile justice to California's 58 counties.

Brown aims to find new revenue for the counties to handle the state's most difficult young offenders in a package of tax extensions he hopes to put before voters in June. But the tax plan is stalled in the legislature, lacking the two-thirds vote needed to put the measure on a special election ballot.

At Chad, young men like 20-year-old Jason Stuart are at the center of the debate over whether the state should get out of the business of incarcerating the most violent juvenile offenders.

Stuart works at reconditioning electronic equipment in a classroom in another building on the sprawling facility. While at CHAD, he is employed with a non-profit business called Merit Partners, which employs young inmates to recycle and recondition surplus electronics, which are then sold on eBay.

Stuart says the experience gives him hope for his future.  "Here we get the chance to do training, to better ourselves so we have the chance to get a better job when we get out,"

There is little dispute that California's youth correctional facilities are doing a better job with their young wards than before, but the cost is high: $225,000 a year for each offender.  Supporters of the plan to close state youth prisons say counties do the job effectively and can stretch the same dollars further.  

Dan Macallair director of the Center for Juvenile and Criminal Justice in San Francisco, says counties can offer everything from high-security and medium-security institutions to a vast array of community based interventions – all under one roof.

Macallair believes moving wards to county facilities also spurs innovation. He points to counties like Santa Cruz, which have assumed more responsibility for juvenile offenders and diverted many from state detention.

In Santa Cruz's small juvenile hall, Chief Probation Officer Scott MacDonald takes the short walk from an outdoor basketball court to a community room.  The building, with 42 beds, is only half occupied and it's old – but for MacDonald it represents his county's success in finding alternatives to locking up young offenders.

He contends that Santa Cruz has avoided the need to build a new facility by reforming its approach to corrections and reducing its reliance on incarceration.

Up until now, MacDonald says boosting the role of counties has worked: and led to a steep decline in the number of youth imprisoned by the state, from 10,000 young people fifteen years ago to under 1,200 today.

"That is a dramatic reduction that shows we can do it," says McDonald. "We can realign our dollars and keep youth at a local level."

But MacDonald concedes that even Santa Cruz County sometimes needs help from the state to incarcerate its most violent young offenders.

One teenage boy awaiting trial in the Santa Cruz facility is a case in point.  He's been in and out of juvenile hall for years and he's a member of a Latino street gang. He says he has learned from an older gang member that to truly gain acceptance in the gang, he has to be willing to kill a rival.

"I have to show him I'm willing to take someone's life. Whack someone," he says. "That's just how it goes.  Every ‘hood is like that."

If a teen like this was convicted of a violent crime but state juvenile prisons were shuttered, Scott MacDonald could have a problem.

"We can't build a facility in a county our size that focuses on one or two kids," he says. "This is a juvenile hall that was designed for short-term detention."

Sara Norman is the managing attorney at the Prison Law Office, says many California counties simply cannot handle violent kids. Norman's group filed the landmark lawsuit that forced changes in state juvenile justice division and she's a long-time critic of youth prisons. Even so, she says, they are still necessary as a last resort.

"In the absence of the counties' capacity to deal with these youth, we think that the state system remains the most viable way to meet their needs," Norman says.

In response to some counties' opposition to complete closure of the state-run juvenile corrections system, Governor Brown proposed a compromise: counties can choose to handle their toughest offenders locally, or pay the state to do it for them. Last week the legislature approved the governor's plan, which is expected to continue the shift to local control but will likely keep some state youth facilities open, at least for now.

But funding this new approach depends on voters approving a tax extension in a still-uncertain June special election. And the tension over who handles California's most difficult and dangerous youth underscores the challenges of carrying out Gov. Brown's vision of moving government closer to the people.

Learn more about how county governments shut down Brown's plan.

Part two of this series.