The decision to close four hospitals and lay off 948 employees is a bleak reminder of Alabama’s shrinking budget. But it is also the latest example in a longstanding national effort among states to relocate mentally ill patients from government hospitals to small group homes and private hospitals. Mental health advocates believe patients often get better care in smaller, less isolating facilities. Since the 1990s, Alabama has closed 10 other mental health treatment centers. “What’s unusual is how many hospitals in Alabama are being closed so fast,” said Bob Carolla, a spokesman for the National Alliance on Mental Illness. “The trend has been to downsize much more gradually.” By May 2013, the state plans to have two remaining state mental health hospitals, one for criminal suspects and another for geriatric patients. Nearly all of the 524 other mentally ill patients will get treatment at group homes and community centers, which are less expensive and give them more freedom, state officials say. The announcement, by the Alabama Department of Mental Health, was made against a dire financial backdrop. Since 2009, the state has reduced financing for mental health services by 36 percent, the second-highest rate in the country. And next year, the Legislature says, the budget for those services could be cut an additional 25 percent, or $29 million. “Given that we are facing potentially a $29 million decrease in our budget, we have to be able to come up with that money,” said David Jackson, the department’s chief operating officer. Mental health advocates were torn. While many have criticized state-run hospitals as isolating patients and stigmatizing mental illness, they worry about the state’s having group homes to accommodate the closings. “In general, we think it’s a good thing, considering the budget,” said Robert Hermes, the executive director of Wings Across Alabama, an advocacy group. “The hospital tends to be an alienating environment. You often get warehoused and institutionalized. But we need to make sure there are enough community centers for these patients.”