Arizona Governor Katie Hobbs is under investigation for an alleged “pay-for-play” scheme, following a report that a group home business caring for vulnerable children received a significant rate hike after donating to her inauguration and the Arizona Democratic Party. This probe, led by Arizona Attorney General Kris Mayes, a Democrat, was initiated after state Sen. T.J. Shope, a Republican and Arizona Senate president pro tempore, requested an investigation.
The controversy began when The Arizona Republic reported that Sunshine Residential Homes, which operates group homes for foster children, was granted a nearly 60% increase in taxpayer funds from the Arizona Department of Child Safety (DCS) after previously being denied. The approval came after the company donated around $400,000 to Hobbs and the state Democratic Party.
According to the report, group home providers had requested rate increases multiple times since July 2022. Ohana Homes, for example, received a rate increase to $155 per day in September 2022, before Hobbs took office, but their contract was not renewed this year. Sunshine Residential Homes had initially sought a 20% rate increase in December 2022, which was denied on February 6, 2023. Just three days later, a $100,000 check from Sunshine was credited to Hobbs’ inaugural campaign. By May 2023, Sunshine secured a rate increase, netting $234 per day for standard group home services, significantly higher than the average $169 for other group homes.
No other group home provider has been approved for a rate increase during Hobbs’ tenure, according to The Arizona Republic. Sunshine’s request for the increase was attributed to financial hardships from the COVID-19 pandemic and inflation. This situation prompted Sen. Shope to involve both the Attorney General and Maricopa County Attorney Rachel Mitchell, highlighting the suspicious timing and amount of the rate hike.
Shope expressed deep concern over the matter, particularly given the substantial sums involved and the lack of similar rate increases for other providers. He noted that Sunshine’s CEO was on Hobbs’ inauguration committee, raising further questions about potential conflicts of interest.
In response, the Attorney General’s Office confirmed it would open an investigation. Nick Klingerman, chief counsel of the criminal division in Mayes’ office, stated that they are statutorily obligated to investigate such allegations.
Governor Hobbs’ office has denied any wrongdoing, asserting that the governor had no role in the DCS decision regarding Sunshine’s pay. A spokesperson called the investigation politically motivated, asserting Hobbs’ commitment to Arizona families and children.
This rate increase approval coincides with the state’s efforts to reduce reliance on group homes and move children into family settings. During this period, the DCS has denied pay increases to other home operators and terminated contracts with 16 providers, according to The Arizona Republic. The investigation will determine whether these actions were appropriate or indicative of broader issues within the administration.