This week, Governor Katie Hobbs issued a directive to all of her agency directors not to appear or testify at the inaugural hearing of the Arizona House Ad Hoc Committee on Executive Budget Mismanagement. Hobbs issued the directive 15 minutes prior to the start of the meeting. Democrats on the committee also refused to attend.
According to Committee Chairman Matt Gress (R-LD4), agency leaders from AHCCCS and the Department of Economic Security (DES), who share responsibility for the $122 million shortfall in Arizona’s Developmental Disabilities (DD) program, were scheduled to appear before the committee and answer for the program’s massive cost overruns that have threatened to disrupt critical services for Arizona families.
Gress said in a statement, “The Governor pulled her directors because she can’t defend the damage she’s done. If she had a plan, she would have sent her team to explain it. Instead, she’s hiding behind a press release while Arizona families face the consequences of her financial mismanagement. This Legislature asked for answers. The Governor responded with a tantrum. What she calls a ‘political stunt’ is actually legislative oversight—a constitutional duty that we will carry out whether she likes it or not.”
In the press release referred to by Gress, Hobbs and Democratic House Assistant Leader Nancy Gutierrez claimed the “Ad Hoc committee is a waste of time and a shameless political stunt,” and derided it as a “sham,” demanding instead that the legislature issue a supplemental budget bill to cover the shortfall.
Despite the conspicuous absence of Democrat members of the committee, the hearing went forward with the Republican members reviewing budgetary data, testimony from the Joint Legislative Budget committee, and expert testimony from former Idaho House Majority Leader Megan Blanksma, whose state suffered what Gress’ office called “a near-identical funding crisis.”
The committee issued its formally adopted findings, naming the Hobbs administration accountable for:
“Without approval from the Legislature or specific appropriation authority, dramatically expanded its Developmental Disability program by making permanent a temporary, COVID-era program to pay parents to provide attendant and habilitative care to their minor children.”
“The programmatic and scope changes of the DD program adopted by AHCCCS and implemented by DES led to dramatic unfunded liabilities, threatening the entire DD program and leaving the state with at least a $122 million budget deficit in FY2025.”
“Through its Medicaid agency at AHCCCS, put the Department of Economic Security under legal threat with a November 2023 Corrective Action Plan, which aimed to grant parents 2 additional hours for care under the PPCG program, which was at odds with the ’extraordinary care’ standards and dramatically expanded costs to the state.”
“AHCCCS delayed implementation of guardrails on the PPCG program by over 18 months, despite its original plan submitted to the Federal CMS in August 2023, causing considerable cost overruns and unrealistic expectations for families.”
The committee further found that “The critical nature of the Developmental Disabilities program and its pending exhaustion of funds requires that the Executive identify available federal funds, and the Legislature will work to identify transfers of other available funds, in the month of April, to continue the program.”
It also added that “the State Legislature must receive annual reports from the executive administration identifying all federal funds received and an exit plan should those federal funds be eliminated.”
In a statement following the hearing, Gress addressed the Democrats’ absence and Hobbs’ order for her agency directors not to attend.
“Fifteen minutes before the committee hearing began, I received a letter from Governor Hobbs criticizing legislative intent on providing oversight and learning exactly what happened. Now this is a pattern and a practice of Governor Hobbs. She fails to even acknowledge who’s responsible for this problem. Instead, it’s deflection and trying to scare families who rely on the DD services for their loved ones.
“We will not be deterred. Her unhinged, chaotic letter falls far below the standard that Arizonans expect of their leaders. We will continue to find the facts. We will be the adults in the room to provide a supplemental appropriation, and we will ensure that there are guardrails put in place so that this never happens again.
“Let me be very clear, we will not pass a financially irresponsible supplemental. It will include the reforms necessary to protect families who rely on DD for their loved ones. We demand accountability and transparency, and it’s going to happen soon.”
On Monday, Arizona House Republicans revealed that the Department of Child Safety’s (DCS) Congregate Care program is bound for bankruptcy in a week’s time and announced the creation of a House Ad Hoc Committee to investigate the responsibility of Democrat Governor Katie Hobbs for a series of fiscal failures.
Arizona House Speaker Steve Montenegro, joined by Majority Leader Michael Carbone, Majority Whip Julie Willoughby, Speaker Pro Tempore Neal Carter, and members of the House Republican Majority called out the governor directly. “This is not a simple oversight—it is gross financial mismanagement at the highest level,” said Speaker Montenegro. “Governor Hobbs has made a habit of overspending, ignoring reality, and then sounding the alarm only when disaster strikes. The difference here is that Arizona’s children will be the ones to suffer for her failures. That’s why I’m taking immediate action.”
The Speaker continued, “This is a pattern. Congregate Care is set to go bankrupt next week. The Governor’s mismanaged Developmental Disabilities program will collapse by the end of April. Her administration failed to budget for formula growth in AHCCCS for two years straight—racking up hundreds of millions in unaccounted costs. The list goes on. This is not leadership. This is incompetence.”
“The people of Arizona didn’t elect us to stand by while the Governor manufactures crisis after crisis. House Republicans will ensure accountability and enforce responsible budgeting, but we expect the Governor to take ownership of her failures. That starts with making her staff available to the Legislature so we can fully understand the depth of this mismanagement and pursue the right solutions. Governor Hobbs may be comfortable with chaos, but we are not.”
As reported by AZ Free News in February, Treasurer Kimberly Yee reported on the allegations against the Hobbs administration in a letter to Chairman of the Arizona House Appropriations Committee, Rep. David Livingston.
In a statement at the time, Livingston said, “I appreciate Treasurer Yee’s clarity in addressing the financial mess Governor Hobbs has created. The issue isn’t ‘missing money’—it’s blatant mismanagement.”
“Under the Governor’s feckless leadership, state agencies are making massive spending decisions with zero legislative oversight, ballooning costs, and expecting taxpayers to foot the bill. This kind of incompetence cannot stand.”
The release from Montenegro detailed that the House Ad Hoc Committee on Executive Budget Mismanagement will examine “how the Governor has consistently mismanaged the budget, ignored financial reality, and allowed critical services to reach the brink of collapse before taking action.”
The Speaker also directed the Chairman of the Joint Legislative Budget Committee to summon the Committee to order and instruct Governor Hobbs to redirect existing funds to handle the crisis and prevent harm to the children in DCS custody noting, “The Governor’s administration failed to spend wisely, and it is their responsibility to fix this situation—not the Legislature’s job to bail them out.”
A Republican lawmaker is demanding answers of Arizona’s Democrat Chief Executive over a looming financial crisis of a vital program for parents and children.
On Wednesday, State Representative David Livingston sent a letter to Arizona Governor Katie Hobbs, “renewing his warning over the imminent insolvency of the state’s Developmental Disabilities (DDD) program, calling out [the governor’s] administration for its fiscal mismanagement and lack of legislative consultation.”
In a statement that accompanied the press release sharing the contents of the letter, Livingston, the Chairman of the House Appropriations Committee, said, “This administration has made major financial commitments without consulting the Legislature, and now families are staring down the consequences of an unsustainable program. Governor Hobbs must explain why her agencies are making decisions without oversight and what her plan if this program collapses.”
Livingston added, “Under Governor Hobbs’ watch, the cost of this program has exploded from $750 million to $1.5 billion. The Legislature was blindsided by these numbers, and we need immediate answers on how the administration plans to rein in spending before Arizona families are left with nothing.”
The longtime Arizona legislator wrote in his letter, “As I continue to untangle the executive budget proposal, I am most disturbed to learn that decisions made by your departments have threatened the operations of the State’s Developmental Disabilities program. The House Appropriation Committee was briefed last week, less than two weeks after your original budget proposal, that DDD’s supplemental needs have increased from $109 million just to keep the program from ceasing operations in April. This is alarming to both the Legislature and families using this program.”
Representative Livingston noted that his committee “was briefed that cost overruns are for three primary reasons: growth in eligibility, increased rates, and the continuation of the COVID-era Parents as Paid Caregivers Program.” He highlighted that “AHCCCS not only made these decisions without consultation of the Legislature, but without consultation of DDD, the manager of the program.”
The questions Representative Livingston asked of the Governor’s Office are as follows:
“Will your office choose the same posture this year and what is your plan when the DDD program must discontinue operations in the Spring?” (referring to the lateness of budget negotiations between the Governor and legislative Republicans)
“Can you explain why AHCCCS makes decisions without input?”
“I need to know as soon as possible what AHCCCS and DDD plan to do to control the spiraling costs in these programs.”
“What oversight and controls can be implemented to relieve the pressure on these employees and ensure uniform implementation?” (referring to reports of pressure by parents on Service Coordinators to increase hours, affecting the spending within the program)
This financial crisis over DDD adds to a rocky start of the 57th Regular Session between Arizona Republican legislators and Governor Hobbs in the third year of a divided state government.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
A powerful Arizona legislator is continuing to shine the light on the governor’s reported shenanigans with the state’s finances.
Earlier this week, Arizona State Senator T.J. Shope introduced SB 1612 “to hold the Executive Branch accountable and prevent any future conflicts of interest from arising within the state procurement process” by “remov[ing] an exemption allowing the Arizona Health Care Cost Containment System (AHCCCS) to create their own procurement code.” The bill would also “prohibit an agency and state employees from destroying notes and documents created during a request for proposal (RFP) [and] require anyone responding to a state issued RFP or applying for a state administered grant to disclose any donations made to the Governor and campaign affiliates.”
Arizona Senate President Warren Petersen is a cosponsor of the legislation.
The need for this bill, according to Shope’s press release, became heightened after “an administrative law judge concluded AHCCCS improperly awarded contracts for healthcare services for 26,000 elderly and physically disabled individuals enrolled in the Arizona Long Term Care System…based on several factors, including violations of statutes and rules by AHCCCS, prejudice, a lack of transparency, contract awards based on best interests of the agency and not the state, an arbitrary and flawed ranking system of bid proposals, as well as deceptive criteria provided by AHCCS to health care companies on the evaluations of their bid proposals.”
In a statement accompanying the announcement of his bill, Senator Shope said, “The Hobbs Administration has a track record of engaging in questionable and unethical practices where favoritism is given, using taxpayer dollars, to those who are close to or have provided benefits to the Governor, her cabinet, and her allies. This legislation should help address these scandals and prevent future unfair advantages from being provided. Arizonans expect their elected officials to make decisions based on what’s best for the state and its citizens; not what’s best for their own personal agendas and political bank accounts.”
Last year, The Arizona Republic broke a story about the Arizona Department of Child Safety “approv[ing] what amounts to a nearly 60% increase in the rate that Sunshine Residential Homes Inc. charges to care for a child for a day.” The alleged action to approve the rate increase for the one organization was made while “DCS has denied pay increases to home operators and cut loose 16 providers during the contract renewal process.” The Republic also asserted that “no other standard group home provider was approved for any rate increase during Hobbs’ tenure.”
After the story ran in the Republic, Shope sent a letter on June 5 to both Attorney General Kris Mayes and Maricopa County Attorney Rachel Mitchell, asking both officials to “examine the facts surrounding the Department of Child Safety’s alleged decision to approve a nearly 60% rate increase for Sunshine Residential Homes and determine if conduct by any of the involved parties warrants a criminal or civil investigation.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Arizona schools will be receiving a supply of overdose kits to address the increased impact of drugs on students.
The Arizona Department of Emergency & Military Affairs (DEMA) began delivering over 16,000 Narcan anti-overdose kits to schools on Wednesday. The Arizona Department of Education (AZED) oversaw the initial deliveries across all 15 counties.
In a press release, Superintendent Tom Horne said these kits were a lifesaving preventative to the increased presence of illicit substances in the state.
“Lives will be saved because these kits will be in schools throughout Arizona,” said Horne. “The STOP-IT Task Force has done incredible work to address the Fentanyl crisis among school-aged children and this is a major step to protecting the lives of students and raising awareness of this terrible scourge.”
The Narcan kit deliveries are part of AZED’s Overdose Preparedness & Intelligence Taskforce (STOP-IT), a new task force established this year to address the growing opioid epidemic. The idea for placing kits in schools came out of a meeting back in May.
The Arizona Department of Health Services (AZDHS) provided the Narcan kits at no cost to the state, and the Arizona Health Care Cost Containment System (AHCCCS) will provide training.
The kits come with flyers on training resources, information on county health agency partners, an announcement of an upcoming comprehensive STOP-IT Toolkit release, and a QR code taking the user to real-time training on Naloxone Resources from AHCCCS.
STOP-IT co-chairs are Holly Geyer from the Mayo Clinic and Mike Kurtenbach with AZED, leading over 60 representatives across various government agencies, schools, healthcare entities, law enforcement, and other organizations.
Geyer credited the initiative’s success to the collaborative strengths of Arizona agencies in Thursday’s press release.
“The STOP-IT naloxone distribution initiative could not have materialized without the unprecedented collaboration between the Department of Education, the Department of Health, AHCCCS and the National Guard,” said Geyer. “The representatives appointed through these agencies proved themselves strategic problem solvers who prioritized the mission and produced outcomes that far exceeded the taskforce’s original targets. Because of their resolve, we are proud to offer schools more than just naloxone. We can offer confidence in the safety of our school campuses and parental peace of mind.”
DEMA director Kerry Muehlenbeck said that their team’s logistical support for tackling drug overdose incidents ensured a better approach to their ultimate goal of reducing drug demand.
“Through this multi-agency initiative, we build stronger communities and support wellness in our future generations,” said Muehlenbeck.
Schools signed up for Narcan kits through the AZED’s online form, with the permission of their district or charter approval first. Further information about the kit distribution and application was submitted in a memo sent to schools across the state last month.
Per AZED, these overdose kits will be continually replenished to ensure schools’ continued ability to handle opioid emergencies.
Arizona reported over 1,900 opioid-related deaths and over 4,000 overdoses last year. 26 of those opioid-related deaths were among minors (those under the age of 17).
So far this year, AZDHS has recorded over 3,200 non-fatal opioid overdoses and over 1,000 confirmed opioid deaths. The total deaths among minors for this year amount to less than 10.
AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.
