Democrat Arizona Gov. Katie Hobbs Under Investigation for Alleged ‘Pay-to-Play’ Scheme

Arizona Democrat Governor Katie Hobbs is under investigation for an alleged “pay-for-play” scheme following a report revealed a group home business that looks after endangered children was approved for a rate hike following a donation to the Arizona Democratic Party and inauguration.

Kris Mayes, Arizona Democrat Attorney General, said her office has launched a probe into the matter after receiving a request from state Senator T.J. Shope, a Republican who is also the Arizona Senate president pro tempore.

The request followed a report in The Arizona Republic showing that Sunshine Residential Homes, the operator of group homes for foster kids, was approved for an increase of almost 60% in taxpayer funds from the Arizona Department of Child Safety (DCS) after previously being denied an increase.

The approval followed after the private company Democratic Party, according to the report. 

The publication reported that since July 2022, group home providers have asked the department at least a dozen times to increase a standard bed rate.

One provider, Ohana Homes, received an increase to $155 per day in September 2022, prior to Hobbs taking office, and then the contract for Ohana wasn’t renewed this year.

Sunshine Residential Homes sought a 20% rate increase to $179 daily in December 2022, but DCS refused on February 6, 2023, according to records provided by the department cited by The Arizona Republic.

On February 9, 2023, a $100,000 check from Sunshine was credited to Hobbs’s inaugural campaign. In May 2023, it secured a rate increase to net Sunshine Residential $234 per day for standard group home services. This is far more than the average $169 for other group homes. But a Hobbs spokesperson told the publication the payment was made on December 15, 2022.

The increase means that Sunshine is receiving the most out of the dozens of home providers operating in Arizona, according to The Arizona Republic, citing state contract records and DCS it reviewed.

The publication also reported that no other group home provider had been approved for a rate increase during Hobbs’ tenure. Sunshine requested the increase due to financial hardships amid the COVID-19 pandemic and inflation.

Meanwhile, Shope also sent the letter to Maricopa County Attorney Rachel Mitchell. He now says it’s up to investigators to determine what happened.

“We were talking about millions of dollars, and to know that not many, if any it all, have seen rate increases that large, it was definitely troubling,” said Shope.

The CEO of the firm was on the inauguration committee for Hobbs.

“I have to believe that they, at the very least, see the allegations the same way that I do, which is troubling at best and possibly worse,” said Shope.

AG chief counsel said the office is obligated to investigate the matter

Nick Klingerman, the chief counsel of the criminal division in Mayes’ office, said they are compelled to investigate the matter after being notified.

“The Criminal Division of the Attorney General’s Office is statutorily authorized to investigate the allegations and offenses outlined in your letter. To that end, the Attorney General’s Office will be opening an investigation,” wrote Klingerman.

A spokesperson for Hobbs denied the accusations in a statement and said the Hobbs’ office played no role in the DCS decision on Sunshine’s pay.

“Just like past investigations instigated by radical and partisan legislators, the administration will be cleared of wrongdoing,” said the statement. “Governor Hobbs is a social worker who has been a champion for Arizona families and kids. It is outrageous to suggest her administration would not do what’s right for children in foster care.”

The move to approve an increase in rate to Sunshine Residential Homes came at a time when the state is looking to reduce the use of group homes and move vulnerable children into family settings. For example, the DCS has denied pay increases to home operators and cut ties with 16 providers during contract renewal, reported the Republic.