Gillette Anounces Hobbs-Sunshine Pay-for-Play Escalation

PHOENIX – The Arizona House of Representatives escalated a years-long investigation into the Department of Child Safety (DCS) this week, retaining independent outside counsel to examine whether the political donations were followed by preferential treatment inside Governor Katie Hobbs’ administration. The Arizona Globe has been reporting on this story since the scandal emerged in 2024.

House leadership announced this week that an advisory team has engaged counsel to examine whether political donations were followed by preferential treatment inside DCS – specifically involving Sunshine Residential Homes, one of the state’s largest congregate care providers. The move follows multiple audit findings, legislative referrals, and media reporting that raised unresolved questions about contracting decisions, rate increases, and executive branch accountability.

According to lawmakers, concerns surrounding Sunshine Residential have been continuously documented for years, while internal agency communications cited in prior reporting referenced Sunshine’s political ties, efforts to keep rate decisions quiet from competitors, and internal unease over the increases amid budget shortfalls and statutory directives to reduce reliance on group homes. Representative John Gillette (R-30), who has been involved in the investigation and prior referrals, said the failure to act on documented evidence has now become part of the record:

“When direct evidence of preferential treatment is handed to the Attorney General and nothing happens, the silence becomes part of the record,” Gillette said. “Sunshine Residential donated to Governor Hobbs and the Arizona Democratic Party. As a result, Sunshine received rate increases that exceeded statutory limits and emerged as a preferred provider within the system. These facts are not disputed — and were even reported by mainstream media and documented in public records. If this isn’t pay-to-play, then the term has no meaning.”

Gillette added that the standards applied in law enforcement do not permit ignoring evidence for political convenience.

“Law enforcement standards don’t allow us to ignore evidence simply because it’s politically inconvenient, and neither should Arizona’s top law enforcement officer,” he said, arguing that the protection of taxpayer funds and the lives of children have been reduced to “just a financial transaction” by the Governor’s Office and the Attorney General.

The independent counsel will review records, conduct interviews, and report findings directly to House leadership. Lawmakers say the decision to retain an out-of-state attorney reflects concerns about conflicts of interest and limits of traditional oversight mechanisms, including prior referrals to the Auditor General and county prosecutors.

The investigation also unfolds against a broader backdrop of systemic issues within the Arizona child welfare system, including heavy reliance on congregate care, concentration of payments among a small group of vendors, and fragmented oversight across agencies responsible for placement decisions, funding flows, and reimbursement approvals.

House leaders have pointed to the governor’s vetoes of accountability and verification bills following the Auditor General’s findings as a policy decision that narrowed legislative options for correction, leaving existing administrative structures largely intact.

For now, the scope of the investigation remains open-ended. Next steps will depend on the independent counsel’s findings and whether they substantiate claims that political influence, rather than statutory limits or child welfare outcomes, drove key decisions inside DCS.