Arizona’s political landscape is buzzing with controversy as state prosecutors recently decided not to file criminal charges against Governor Katie Hobbs. The investigation centered around allegations of a pay-to-play scheme involving a group home company, Sunshine Residential Homes, which donated $100,000 to her inaugural fund and subsequently received a rate increase from the state.
The issue arose when Sunshine Residential Homes, a prominent provider, was reported to have contributed heavily to the Arizona Democratic Party and Hobbs’ inaugural celebration. This was followed by a 30% rate increase granted by the state, a benefit shared only with one other company during the 2022-2023 contracting period.
The inquiry has become a significant point of contention as Hobbs campaigns for her second term as governor. Her Republican challenger, U.S. Rep. Andy Biggs, has highlighted the investigation in his campaign ads.
Governor Hobbs has denied any wrongdoing, asserting that she was not involved in the decision to approve the rate increase. “The investigation has not uncovered any evidence of the necessary quid pro quo to support a bribery charge,” stated Attorney General Kris Mayes, who announced the decision not to pursue charges.
Despite the lack of charges, Attorney General Mayes has called for legislative reforms to enhance transparency in political donations by state contractors. She urged both Governor Hobbs and the Republican-led Legislature to consider these improvements.
While Mayes, a Democrat, declined to press charges, a separate inquiry led by Republican Maricopa County Attorney Rachel Mitchell and the state auditor general is ongoing, with no clear timeline for completion or details on how it diverges from the attorney general’s findings.
Company Contributions and Rate Increase
Sunshine Residential Homes contributed a total of $200,000 to the state Democratic Party before Hobbs’ narrow victory over Republican Kari Lake in November 2022. Following her win, the company made a $100,000 donation to Hobbs’ inaugural fund and later added another $100,000 to the party in August 2023, as per records.
Founder Simon Kottoor and his wife, Elizabeth, also donated $10,000 each to Hobbs’ gubernatorial campaigns. The company first requested a rate increase in 2022 but was denied shortly after Hobbs assumed office. A subsequent request was approved in May 2023, raising the rate from $149 to $195 per bed.
The Arizona Department of Child Safety reported that Sunshine threatened to reduce its bed capacity unless the rate was increased, planning to allocate those beds for unaccompanied immigrant children at a federal reimbursement rate nearly double that of the state. This potential loss of bed capacity posed a “serious capacity concern,” as stated by the agency.
Sunshine, a significant provider with about 290 beds across 28 homes, supplies 70% of beds for siblings in foster care in metropolitan Phoenix. The state’s ability to place children would be severely impacted by the loss of these beds, risking the separation of siblings into different homes.
According to the agency, the rate increase was approved by then-DCS Director David Lujan, with no involvement from Governor Hobbs or her staff. In 2024, all providers with existing contracts were granted rate increases, with Sunshine’s rate climbing to $234 per bed.
Ongoing Scrutiny and Legal Challenges
The group home company was already under scrutiny prior to the rate increase due to the tragic death of Jakob Blodgett, a 9-year-old who died of diabetes complications while under Sunshine’s care. The incident led to allegations of negligence against the company and state child welfare authorities.
A lawsuit claims mismanagement of Blodgett’s diabetes by Sunshine employees, who testified to lacking adequate training or knowledge to treat the condition. The Maricopa County Sheriff’s Office continues its criminal investigation into the boy’s death, but no charges have been filed yet.
—
Read More Arizona News
