PHOENIX — Republican lawmakers are moving to investigate Governor Katie Hobbs after a budget shortfall at Arizona’s child welfare agency.
The Department of Child Safety is asking lawmakers to approve a shift of agency dollars to cover a budget hole in funding for group homes serving children in foster care.
A spokesperson for Hobbs characterized the request as a routine budget ask, but House Republicans pointed to it as an example of fiscal mismanagement.
“The Department of Child Safety congregate care program is bankrupt next week,” House Speaker Steve Montenegro said Monday. “Next week, folks, next week.”
Without the transfer, DCS will run out of money March 24 for the daily rate to house children in group homes.
Approximately 1,500 children are in group homes, according to Montenegro. Without state funding, they would need to leave those facilities and sleep in welcome centers or DCS offices, the agency said in a letter to lawmakers.
“This is inappropriate and negligent to these children who are in a very, very trying situation,” state Rep. Julie Willoughby, R-District 13, said. “I have two small kids, and the idea to think that any children would be treated this way and dismissed in that way is inappropriate.”
Montenegro is forming a panel to investigate the group-home funding shortfall, as well as a deficit in the state’s Division of Developmental Disabilities and growth in Medicaid funding.
“Today, I'm creating an Ad Hoc Committee on Executive Budget Mismanagement to study all of these failures and to see what we need to do to move forward,” he said. “We will determine solutions and find a way to avoid this bankruptcy so that we can move forward.”
Hobbs’ office: ‘DCS will not be bankrupt next week’
DCS is requesting funds be transferred from two other of its programs to pay for group home funding. The Governor’s Office said such “special line item transfers” are routine, noting that DCS has had them every year since 2016.
“No, DCS will not be bankrupt next week,” said Christian Slater, Hobbs’ spokesperson. “They simply requested a shift in line item funding, a standard budgeting process.”
DCS requested the budget transfers in a letter to the Joint Legislative Budget Committee on March 5. Montenegro, a Republican who represents Legislative District 29, questioned the timing of the ask.
“Who waits until 19 days before bankruptcy to tell anybody about it?” he said.
But Slater said in his statement that this was brought to JLBC’s attention on January 29.
“The majority should do their jobs and pay attention in committee hearings rather than weaponize routine budgeting processes to hold Arizonans hostage for their own political gain,” he said.
The JLBC will meet this week to consider DCS’ funding request.
But Montenegro said Republicans will not consider passing a supplemental funding bill for group homes, saying JLBC will tell Hobbs to cover the shortfall with money in her budget.
“This is not a time for bailouts,” he said. “This is a time for her to learn how to manage her own budget.”
GOP lawmakers also pointed to an ongoing investigation of a state-contracted group home for foster children that has donated hundreds of thousands of dollars to Hobbs and the Arizona Democratic Party.
DCS approved a daily rate increase for Sunshine Residential Homes last year, and Attorney General Kris Mayes said in June she was pursuing a criminal investigation.
Sunshine is the operator of a group home where a 9-year-old boy with diabetes in Arizona's foster care system died in 2022 after workers reportedly allowed him to refuse an insulin shot.
Finger-pointing over disability funding continues
In his statement, Slater called on Republicans to approve additional funding for the Division of Developmental Disabilities, which is on track to run out of money next month. The Hobbs administration has asked for lawmakers to pass a supplemental funding bill to cover the shortfall.
“Instead of preening for the press for political gain, legislative Republicans should stop lying to their constituents, fund services for Arizonans with autism, Down syndrome and cerebral palsy and own up to the pain they want to cause the people of Arizona by presenting their budget proposal,” he said in his statement.
But House Republicans pointed to DDD as another example of mismanagement.
“She expanded the scope ... and raised rates, all without the consent of the Legislature of the necessary funding to meet her policy changes, and it now threads the viability of the entire program,” said Majority Leader Michael Carbone, R-District 25.
Brandi Coon, the co-founder of the Raising Voices Coalition, which advocates for Arizonans with disabilities, said she has reached out to lawmakers to explain why costs for DDD have gone up.
“The issue is much more complex than they’re making it sound,” she said.
Coon said DDD’s Parents as Paid Caregivers Program helps keep families out of poverty, saying single parents raising children with disabilities would be most impacted.
“The care requirements of these children is so profound that you cannot hold a traditional job,” she said. “You are going to multiple appointments a week. You have unexpected hospitalizations multiple times a month.”
The disability community has been repeatedly shut down when trying to attend hearings on DDD funding, she said.
“While we’ve been emailing them, we’ve been calling them, it’s been very frustrating as a community to not have our voices heard and be part of the solution,” she said.
