The State House Republican majority held a press conference on Tuesday to address concerns over what some are calling a pay-to-play scheme involving Democratic Governor Katie Hobbs. Republican officials said Hobbs is under investigation by the county attorney and attorney general for significantly increasing the rate paid to just one group home provider for foster children, Sunshine Residential Homes, after the provider made a $100,000 donation to her inauguration festivities. Hobbs informed the state legislature that the Department of Child Safety Congregate Care Program (DCSCCP) was going bankrupt only 19 days before the agency will run out of money, next Tuesday.
State House Speaker Steve Montenegro (R-Glendale) spoke first, calling it the “peak of irresponsibility.” “More bad news from Governor Katie Hobbs’ administration,” he said. “Just days ago, just days ago, we were informed by her by her budget office that the Department of Child Safety Congregate Care Program is bankrupt next week.”
He said it is “another Hobbs budget crisis, another Hobbs bankruptcy budget crisis. This trend is now impossible to ignore. The governor spends beyond her budget. She waits until it fails, and then she declares an emergency.” Montenegro said Hobbs announced in January that the program needed supplemental funding. However, she waited until March 5 to inform the state legislature that it was going bankrupt.
He went on, “This financial mismanagement threatens the most vulnerable children in our state. … So today, I’m directing the chairman of the Joint Legislative Budget Committee to call a meeting and to find the way to take care of these kids from the budget, from the governor’s own budget, so that they can keep the lights on in DCS.”
Majority Leader Michael Carbone (R-Buckeye) spoke next. “The legislature is tired of these manufactured crises from this governor,” he said. “She expanded the scope of the Developmental Disabilities also known as DD program, and raised rates, all without the consent of the legislature, of necessary funding to meet her policy changes and then outs the viability of the entire program. … The Developmental Disabilities Program was broke by April. … Even though we’re in the third quarter, they tell us that even if we move funds for DCS today, Congregate Care will still go broke in April.”
Carbone listed off several Hobbs staffers who have left or were demoted as more evidence of Hobbs’ “pattern of malfeasance.”
Majority Whip Julie Willoughby (R-Chandler) called Hobbs “negligent” and provided more details. “First, the DCS under the state director David Lujan raised rates 30 percent in Congregate Care for one large vendor,” she said. “This vendor made a six figure donation to Governor Hobbs’ inauguration fund. This is still under investigation. … There are still 1,500 or approximately 1,500 children in Congregate Care.”
Speaker Pro Tempore Neal Carter (R-Casa Grande) asked about the “potential scandal,” “First, why were proposed rates for Congregate Care providers increased? And secondly, why is it that the rate paid to Sunshine Residential who donated to Hobbs’ inaugural fund the only provider whose rate was increased?”
He continued, “Now we’re learning that the program Hobbs is paying Sunshine Residential for is going bankrupt. … I will be working closely with JLBC, the Joint Legislative Budget Committee, to obtain more information about all of Arizona’s Congregate Care providers, their rates, how much taxpayer money. The governor has given to her political allies.”
Montenegro concluded the press conference, “Today I’m creating an ad hoc committee on executive budget mismanagement, to study all of these failures, and to see what we need to do to move forward.” He told a reporter who asked about the budget that Hobbs asked for $6.5 million for the bankrupt program, but it will only pay for April, a “band-aid on in it instead of fixing the problem.”
According to news reports, Sunshine Residential applied for a rate increase in December 2022 but was turned down. The provider donated $100,000 to the inauguration three days later, and soon got the rate increased to $234 per day. This is significantly higher than the average $169 for other group home providers. The provider’s CEO served on Hobbs’ inauguration committee. Sunshine Residential also donated $200,000 to the Arizona Democratic Party.
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Rachel Alexander is a reporter at The Arizona Sun Times and The Star News Network. Follow Rachel on Twitter / X. Email tips to [email protected].
