Arizona Attorney General Kris Mayes announced Friday that her office will not pursue criminal charges against Governor Katie Hobbs over claims that she steered a lucrative rate increase to a foster care company in exchange for large campaign contributions.
The case centered on Sunshine Residential Homes, the state's largest provider of foster care beds for children without developmental disabilities. Records show the company and its founders gave hundreds of thousands of dollars to Hobbs' campaign, the state Democratic Party, and her 2023 inaugural fund around the time of her narrow win over Republican Kari Lake. Not long after, the state approved a payment increase that raised Sunshine's per bed rate from $149 to $195, one of only two providers to see an increase that contracting cycle.
Mayes, also a Democrat, said investigators could not establish the quid pro quo needed to support a bribery charge. Her office concluded the increase more likely reflected Sunshine's leverage as a dominant provider, since the company had warned the state it could shift beds toward a federal program for unaccompanied migrant children that paid nearly double the state's rate. Losing that capacity, child welfare officials said, would have made it far harder to place children and could have split up siblings in foster care.
Hobbs has consistently denied any involvement in the rate decision, saying through aides that she never discussed it with Sunshine and did not learn increases were even being discussed until after they were approved. The state's child safety agency has said the call was made by its then director, not the governor's office.
Mayes' announcement does not end the scrutiny. A separate investigation led by Maricopa County Attorney Rachel Mitchell and the state auditor general remains open, and its timeline and scope are unclear. The episode has also become a flashpoint in Hobbs' reelection campaign, with Republican challenger Andy Biggs highlighting the investigation in campaign advertising.
Even while declining to charge anyone, Mayes said the case exposed a gap in state law around how political contributions from state contractors are disclosed, and she called on Hobbs and the Republican controlled legislature to consider reforms.