AZ Speaker Montenegro Forms House Advisory Team to Investigate Governor Hobbs’ Pay-to-Play Scandal at DCS

Arizona House Speaker Steve Montenegro announced Thursday evening that legislative leaders will launch an investigation into Governor Katie Hobbs’ Department of Child Safety, following an Arizona Republic report alleging a pay-to-play scheme within the agency.

A trove of documents and messages obtained by the Arizona Republic last week revealed that a group home operator, Sunshine Residential Homes, received a 30-percent contractual rate increase, approved after the firm donated over $400,000 to the campaign funds of Governor Hobbs and the Arizona Democratic Party.

In response to the findings from Arizona’s largest circulating newspaper, Speaker Montenegro announced the formation of an advisory team to investigate the outlet’s conclusions. The team is set to include State Reps. Selina Bliss, Chair of the House Health and Human Services Committee; David Livingston; Matt Gress; Quang Nguyen, Chair of the House Judiciary Committee; and Speaker Pro Tempore Neal Carter.

“The facts reported raise serious questions the House cannot ignore,” Speaker Montenegro said in a statement on Thursday.

“Arizona’s children, families, and taxpayers deserve a system that is clean, fair, and focused on care, not political access or donations. The House will secure the records, ask the hard questions, and, if necessary, change the law to ensure it never happens again. We will work with the Auditor General, the Maricopa County Attorney, and the Attorney General while respecting any ongoing investigations. I am directing all relevant agencies and contractors to preserve records and cooperate fully with the Legislature.”

🚨Speaker Montenegro Forms House Advisory Team to Investigate Governor Hobbs’ Pay-to-Play Scandal at DCS

“The facts reported raise serious questions the House cannot ignore. Arizona’s children, families, and taxpayers deserve a system that is clean, fair, and focused on care,… pic.twitter.com/tN8pqGURsr

— Arizona House Republicans (@AZHouseGOP) November 14, 2025

In the wake of The Arizona Republic’s detailed reporting linking provider donations to favorable contracts under Hobbs’ administration has already drawn scrutiny in broader racketeering investigations. As noted by the AZ House GOP, Representative Matt Gress, Chair of the Joint Legislative Audit Committee, urged the Maricopa County Attorney and Auditor General to investigate possible illegal activity in June 2024 after The Arizona Republic first uncovered the company’s financial and political ties to the governor’s office.

Internal documents, communications, and press records show that Sunshine Residential Homes, a group-home operator, made donations exceeding $400,000 to Gov. Hobbs and the state Democratic Party, and shortly thereafter was granted a 30 percent rate-increase contract worth millions. At the same time, other providers were denied similar requests, according to a press release from Arizona Senate Republicans.

Concerns raised by President Pro Tem T.J. Shope on Thursday include:

• Sunshine Residential demanded a sharp rate increase or it would shift its services to the federal system.
• DCS leadership approved the increase despite warnings it would worsen an already projected $13 million shortfall.
• Sunshine Residential claimed a large deficit to justify the hike, yet its financials show $440,000 in operating income.
• Independent accounting experts noted the claimed deficit appeared inconsistent with actual financial performance.

That rate increase came despite DCS projecting a substantial $80M budget shortfall in FY 2025 and being under a mandate to reduce reliance on group homes— raising questions about why this provider was singled out. 

“This is not a partisan issue – it’s a public trust issue,” Shope 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. Arizonans must be confident that their state government is not for sale.”

The timing of this new probe aligns with ongoing inquiries by the Arizona Attorney General’s Office and the Maricopa County Attorney’s Office into allegations of bribery, fraud, conspiracy, and racketeering tied to the governor’s inauguration fund and the Democratic Party, as previously reported by The California Globe.

What’s unfolding in Arizona is more than a state-specific controversy — it’s a blueprint for how political influence can infiltrate agencies meant to protect children. When a state department cleaves to donors, oversight collapses and vulnerable populations pay the price. This story resonates in every state, where contracting, campaign contributions, and state-agency accountability remain pressing concerns.