Arizona Governor Katie Hobbs is under investigation for an alleged “pay-for-play” scenario following a report disclosing that a group home business catering to vulnerable children received approval for a rate hike subsequent to donating to her inauguration and the Arizona Democratic Party.

Arizona’s Attorney General Kris Mayes, a Democrat, has confirmed that her office is conducting an investigation into the matter, prompted by a request from State Senator T.J. Shope, a Republican who serves as the Arizona Senate president pro tempore.

This inquiry stems from a report published in The Arizona Republic, revealing that Sunshine Residential Homes, which operates group homes for foster children, secured a nearly 60% increase in taxpayer funds through the Arizona Department of Child Safety (DCS) after having previously been denied such an increase.

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Following the disclosure, it was revealed that the approval coincided with the private company’s contribution of approximately $400,000 to Hobbs, which included donations to her campaign, inauguration, and the state Democratic Party.

According to The Arizona Republic, since July 2022, group home providers have made over a dozen requests to the department to raise the rate for a standard bed. Ohana Homes, for instance, saw an increase to $155 a day in September 2022, predating Hobbs’ tenure, but their contract was not renewed this year.

In December 2022, Sunshine Residential Homes sought a 20% rate increase to $179 per day, which was denied by DCS on February 6, 2023, as per records from the department cited by The Arizona Republic.

However, on February 9, 2023, a $100,000 contribution from Sunshine was credited to Hobbs’ inaugural campaign. Subsequently, in May 2023, Sunshine Residential obtained a rate increase, securing $234 per day for standard group home services, notably higher than the average $169 for other providers. Nonetheless, a spokesperson for Hobbs informed the publication that the payment was made on December 15, 2022.

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This increase positions Sunshine as the top recipient among numerous home providers operating in the state, according to records from DCS and state contracts reviewed by The Arizona Republic.

The report also highlighted that no other group home provider received approval for a rate increase during Hobbs’ term. Sunshine attributed its request for an increase to financial strains exacerbated by the COVID-19 pandemic and inflation, as reported by The Arizona Republic.

Shope, in addition, forwarded the letter to Maricopa County Attorney Rachel Mitchell. He asserts that it’s now within the purview of investigators to ascertain the facts.

“We were discussing substantial amounts of money, and realizing that very few, if any, had received rate hikes of such magnitude, it was certainly concerning,” Shope stated, as reported by Fox 10 Phoenix.

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The CEO of the company in question was part of Hobbs’ inauguration committee.

“I have to assume that they, at the very least, perceive the accusations in the same light as I do, which is deeply concerning at the least, and potentially even more so,” Shope remarked.

Nick Klingerman, chief counsel of the criminal division in Mayes’ office, emphasized their obligation to investigate the matter subsequent to being informed.

He stated, “The Criminal Division of the Attorney General’s Office is legally empowered to investigate the accusations and offenses detailed in your correspondence. Therefore, the Attorney General’s Office will initiate an investigation.”

A spokesperson for Hobbs’ office refuted the allegations in a statement, asserting that the governor’s office had no involvement in the DCS decision regarding Sunshine’s compensation.

“Similar to previous investigations initiated by extremist and partisan lawmakers, our administration will be vindicated of any wrongdoing,” the statement declared. “Governor Hobbs, a dedicated social worker, has consistently advocated for Arizona families and children. It is unfounded to insinuate that her administration would neglect the welfare of children in foster care.”

The decision to approve a rate increase for Sunshine Residential Homes coincided with the state’s efforts to diminish the reliance on group homes and transition vulnerable children into familial environments. The DCS, for instance, has withheld pay raises for home operators and terminated contracts with 16 providers during the renewal process, as reported by The Arizona Republic.