No person shall be committed to an institution under the control of the Department of Youth Services who is seriously handicapped by having mental illness or an intellectual disability. If after a person is referred to the training schools it is determined that he has mental illness or an intellectual disability to an extent that he could not be properly cared for in its custody, the director may institute necessary legal action to accomplish the transfer of such person to such other state institution as, in his judgment, is best qualified to care for him in accordance with the laws of this state. The department shall establish standards with regard to the physical and mental health of persons which it can accept for commitment.