By Ethan Faverino |
Arizona State Representative Gail Griffin (R-LD19) is raising concerns over the state’s continued failure to meet federal auditing requirements, warning that billions of dollars in federal funding supporting health care, long-term care, and other assistance programs could face penalties.
Arizona has missed the federal Single Audit deadline for four consecutive fiscal years, from 2022 through 2025, under Governor Katie Hobbs’ administration.
The Single Audit is an annual financial and compliance review required by federal law to account for how states spend federal funding and ensure compliance with federal regulations.
Arizona’s fiscal year 2025 audit was due March 31, 2026, but remains incomplete. The Arizona Auditor General has projected that the report may not be released until March 5, 2027, less than a month before the fiscal year 2026 audit deadline.
According to state officials, Arizona spent approximately $28.6 billion in federal funding during fiscal year 2024, including $18.3 billion from the U.S. Department of Health and Human Services (HHS).
The funding supports several programs, including the Arizona Health Care Cost Containment System (AHCCCS), which administers Medicaid services, and the Arizona Long Term Care System (ALTCS), which provides nursing home and long-term care assistance to eligible seniors and individuals with disabilities.
Federal funding also supports behavioral health services, child care assistance, food assistance through the Supplemental Nutrition Assistance Program (SNAP), and other public assistance programs.
“Governor Hobbs has allowed Arizona to remain out of compliance year after year, and now the health care and benefits Arizonans depend on are exposed to federal penalties,” stated Rep. Griffin. “We are talking about $18.3 billion in HHS funding and services that seniors, people with disabilities, and vulnerable families rely on. These Arizonans should not have to worry about losing benefits because the Governor has failed to meet basic federal accountability requirements.”
During a September 21 hearing of the Joint Legislative Audit Committee (JLAC), HHS Assistant Secretary for Financial Resources Gustav Chiarello criticized the state’s response to its overdue audits, calling it “inadequate.”
Under federal regulations, agencies have several enforcement options when recipients fail to comply with funding requirements, including withholding payments, disallowing costs, and suspending or terminating federal awards.
The federal government previously notified Hobbs of Arizona’s noncompliance in a July 14 letter, citing a “consistent pattern of noncompliance” and requesting corrective action.
On July 31, the Arizona Department of Administration (ADOA) proposed completing the overdue audit by December 30, 2026, and shifting portions of the federal compliance auditing process to outside accounting firms.
The Auditor General subsequently disputed that timeline, calling it unrealistic and identifying March 5, 2027, as a more achievable completion date.
Arizona’s delayed audits have already resulted in financial consequences for the state’s public universities. Federal agencies have reportedly withheld or frozen hundreds of millions of dollars in funding, including approximately $154 million from the National Institutes of Health (NIH).
Shortly after, the universities separated their federal audits from the statewide Single Audit process to protect their access to federal funding.
During the September hearing, Chiarello also testified that neither Hobbs nor her office had directly contacted him or his staff to address the state’s noncompliance following the July notification.
“For four years under Governor Hobbs, this problem has gotten worse instead of better,” Griffin said. “Arizona has missed four consecutive federal deadlines, the number of audit findings has grown, and HHS is now warning about federal enforcement. Even after HHS formally notified the Governor that Arizona was not in compliance, her office did not have a direct conversation with the federal official responsible for addressing the delinquency. Four years is more than enough time to get this under control.”
State officials have attributed the continued delays in part to late financial reporting from multiple agencies, including the Arizona Department of Economic Security (DES). The Auditor General also reported that agency submissions were arriving later than in previous years, further complicating efforts to complete the required audits.
At the hearing, ADOA acknowledged that the delays were unacceptable but did not commit to completing the fiscal year 2026 audit by its federal deadline.
Griffin called on the Hobbs administration to establish a realistic timeline, improve communication with federal officials, and implement corrective measures to bring Arizona back into compliance.
“Governor Hobbs needs to take responsibility and fix this,” said Griffin. “Arizona needs a credible timeline, direct engagement with the Department of Health and Human Services, and an immediate plan to bring the State back into compliance.”
“Seniors, families, and Arizonans with disabilities should not have their health care and other essential benefits put at risk because the administration cannot get its financial reporting in order,” added Griffin.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
