by Jonathan Eberle | Nov 18, 2025 | News
By Jonathan Eberle |
Arizona House Speaker Steve Montenegro has formed a new advisory team to investigate allegations that Governor Katie Hobbs’ administration awarded a lucrative contract increase to a politically connected group home provider, raising fresh questions about influence and accountability inside the Department of Child Safety (DCS).
The move follows reporting by The Arizona Republic that Sunshine Residential Homes received a 30% rate increase after contributing more than $400,000 to Hobbs and Democratic political committees. According to documents cited in the reporting, other group home providers seeking similar adjustments were denied. Internal communications reportedly show DCS staff discussing the provider’s political connections to the governor and suggesting the increase be kept quiet from competing organizations.
The revelations come as DCS faces a budget shortfall and has been under pressure to reduce reliance on group home placements, making the agency’s decision to grant a significant rate hike particularly notable. Speaker Montenegro said the advisory team will conduct a legislative investigation to assemble facts, coordinate with law-enforcement agencies, and evaluate possible actions the House may take to prevent preferential treatment in state contracting.
“The facts reported raise serious questions the House cannot ignore,” Montenegro said in a statement. “Arizona’s children, families, and taxpayers deserve a system that is clean, fair, and focused on care, not political access or donations.”
The speaker also directed state agencies and contractors to preserve all relevant records and to cooperate fully with the Legislature. The advisory panel includes several senior lawmakers including Rep. Selina Bliss, Chair of the House Health and Human Services Committee; Rep. David Livingston, Chair of House Appropriations; Rep. Matt Gress, Chair of the Joint Legislative Audit Committee; Rep. Quang Nguyen, Chair of House Judiciary; and Speaker Pro Tempore Neal Carter.
The investigation builds on earlier legislative efforts to probe the relationship between Sunshine Residential Homes and the Hobbs administration. In 2024, Rep. Matt Gress requested investigations by the Maricopa County Attorney and the Auditor General following the first reports linking the provider to political contributions and favorable treatment. Rep. David Livingston separately urged Attorney General Kris Mayes to recuse herself, citing concerns about conflicts of interest involving the governor and the Democratic Party.
The House advisory team is expected to begin its work immediately and will coordinate with any parallel investigations by the Auditor General, the Maricopa County Attorney’s Office, or the Attorney General. Montenegro said lawmakers will “secure the records, ask the hard questions, and, if necessary, change the law to ensure it never happens again.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
by Jonathan Eberle | Nov 17, 2025 | News
By Jonathan Eberle |
Newly surfaced documents and internal communications are raising new questions about political influence inside the Arizona Department of Child Safety (DCS), prompting calls for accountability from legislative leaders. Senate President Pro Tempore T.J. Shope is urging state and county prosecutors to provide an immediate update on whether investigations into the matter remain active.
The controversy centers on Sunshine Residential Homes, a group home provider that recently received a 30% rate increase from DCS. The company has been a significant donor to Governor Katie Hobbs and multiple Democratic political groups—connections that agency employees reportedly flagged as a source of concern.
According to internal messages and financial records reviewed by lawmakers, DCS staff expressed discomfort with the approval process for the rate hike. Employees referenced Sunshine Residential’s political ties to the Governor and suggested the situation placed agency leaders in an “uncomfortable position,” particularly after the provider allegedly pressured the state by threatening to shift services to the federal system unless the increase was approved.
Despite warnings that the higher rate would deepen an already-projected $13 million budget shortfall, DCS moved forward with the decision. Documents also show Sunshine Residential cited a substantial financial deficit to justify its request. However, financial records reportedly indicate the provider had $440,000 in operating income—figures that independent accounting experts said appeared inconsistent with the claimed shortfall.
These discrepancies have intensified questions about whether political considerations influenced decisions affecting vulnerable children in state care. In a letter sent Thursday to Attorney General Kris Mayes and Maricopa County Attorney Rachel Mitchell, Shope requested confirmation that any investigations into the potential “pay-to-play” conduct are ongoing. He also asked prosecutors to update the Legislature on the status of their reviews.
“These revelations are deeply disturbing,” Shope said. “If a provider donating hundreds of thousands of dollars to the Governor then pressures the state for a massive rate increase—and receives it—Arizonans deserve to know whether political influence played a role.”
Shope emphasized that the issue extends beyond partisan lines. “This is not a partisan issue—it’s a public trust issue,” he said. “If political donations influenced decisions inside DCS, especially decisions involving vulnerable children, that is unacceptable. We intend to get to the bottom of this.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
by Staff Reporter | May 17, 2025 | News
By Staff Reporter |
Governor Katie Hobbs has another secretive fund, this one used to cover legal expenses.
Hobbs has never disclosed the existence of this fund, which covered the costs of a lawsuit filed against her by former gubernatorial candidate Kari Lake. AZ Capitol Times uncovered and first reported on its existence after discovering a financial report from the parent company of the state’s electric utility giant, Arizona Public Service (APS), disclosing a gift of $100,000 in 2024 to cover Hobbs’ legal expenses.
State law enables Hobbs to maintain this secretive fund; it has for nearly a decade.
APS parent company, Pinnacle West Capital Corporation (PWCC), also gave to Hobbs’ other secretive fund for her inauguration.
Although Hobbs’ legal fund was discovered, the governor says she won’t be publicizing any other details about the donors or total amount collected.
Hobbs also attempted to keep her inaugural fund secret, but relented to public disclosure after receiving threats of litigation. Records revealed that Hobbs’ inaugural fund collected nearly $2 million, but the event cost less than $210,000. Government transparency watchdogs attempted to determine whether Hobbs’ inauguration team continued to collect donations in excess of a pre-event budget, to no avail.
PWCC’s singular donation of $250,000 to the fund covered the inauguration in its entirety — but Hobbs pocketed the excess of well over a million for her reelection bid next year. Other large donors to that fund issued $100,000 each: Blue Cross Blue Shield, the National Association of Realtors, and Sunshine Residential Homes.
That last major donor, Sunshine Residential Homes, received millions in contracts from the Arizona Department of Child Safety (DCS) after making around half a million in campaign donations to Hobbs and the Arizona Democratic Party — despite DCS denying pay increases to home operators and dropping 16 providers during the contract renewal process.
Michael Beyer, the newly named communications director for Hobbs’ reelection campaign, defended the legal fund and its secrecy in a statement to the AZ Capitol Times.
“Kari Lake baselessly challenged the results of a free and fair election she lost,” said Beyer. “We won eight times in court, and yet Lake fought the results all the way through November 2024 when she finally lost her last appeal to the Arizona Supreme Court.”
Beyer recently joined the Hobbs campaign following his stint as the communications director for Virginia Senator Tim Kaine’s re-election campaign. Beyer’s past communications work includes the campaign for Mississippi’s 2023 Democratic gubernatorial candidate Brandon Presley, the Ohio Democratic Party, New Hampshire Democratic Party, and the Democratic Governors Association.
Some question whether the funds are another example of alleged “pay-to-play” occurring within the governor’s office. Hobbs approved legislation permitting public power entities like APS to engage in securitization. APS wrote the legislation.
Hobbs issued a defense of her passage of the bill, saying it would lower energy costs and improve grid resiliency.
“By working with bipartisan legislators I put in safeguards to ensure everyday Arizonans, not utilities, will benefit from securitization. And I made sure this bill will provide a tool to grow our energy economy,” said Hobbs. “Because of this bill, Arizona families will save money and we will help create more jobs in a clean energy economy that, in just the last few years, has brought nearly $18 billion in investments to our state and created over 18,000 quality jobs.”
Hobbs also vetoed legislation from Senate President TJ Shope requiring companies seeking state contracts to list all donations given in the past five years to the governor.
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