Arizona Attorney General Kris Mayes announced that prosecutors will not file criminal charges against Democratic Gov. Katie Hobbs regarding allegations that she engaged in a pay-to-play arrangement with Sunshine Residential Homes, a group home company. Mayes stated that the investigation “has not uncovered any evidence of the necessary quid pro quo to support a bribery charge.”
Hobbs faces accusations of providing preferential treatment to Sunshine after the company contributed $100,000 to her inaugural celebration and the state subsequently approved a 30% payment increase for the provider. The Arizona Republic reported that only Sunshine and one other company received increases during the 2022-2023 contracting period. Hobbs has denied any wrongdoing, asserting she was not involved in the decision to grant the rate increase. The Democratic governor is seeking reelection, and the investigation has become a campaign issue, with her Republican opponent citing it in campaign advertising.
While declining to pursue criminal charges, Mayes said the investigation “shows there is a need for legislative reform” regarding transparency around political donations made by state contractors and urged Hobbs and the Republican-controlled Legislature to implement improvements. A separate ongoing investigation by Republican Maricopa County Attorney Rachel Mitchell and the state auditor general continues, with no clear timeline for completion.
The Department of Child Safety stated that then-Director David Lujan approved the rate increase and that the governor and her staff were not involved in the decision. The agency cited significant capacity concerns, noting that Sunshine operates approximately 290 beds across 28 homes and provides 70% of sibling foster care beds in metropolitan Phoenix. Losing those beds could have disrupted the state’s child welfare system. All providers previously under contract with the agency received rate increases in 2024, when Sunshine’s rate was increased again to $234 per bed.
Sunshine’s records show it donated $200,000 to the state Democratic Party before Hobbs’ election, followed by additional contributions of $100,000 to the inaugural fund and $100,000 to the party after her victory.
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