State Treasurer Kimberly Yee is asking Attorney General Kris Mayes to back away from any investigation of whether laws were broken in the awarding of a new foster care contract by the Hobbs administration.
And at least part of the reason is political.
In a letter Monday to Mayes, Yee disputed the attorney general's claim that state law gives her office the authority to investigate the allegations that there is a link between political contributions made by Sunshine Residential Homes and its officers and the company's contract.
More to the point, the treasurer took exception to what she said was Mayes effectively telling Maricopa County Attorney Rachel Mitchell and state Auditor General Linsdsey Perry that the attorney general, in Yee's words, has "singular control over any investigation.''
"Such an assertion is not appropriate or authorized by law, as those entities have separate jurisdiction to investigate this matter,'' the treasurer wrote to Mayes.
But even if jurisdiction overlaps, Yee said there is a "potential conflict of interest'' as the Attorney General's Office also represents the Department of Child Safety, which awarded the contract to Sunshine.
And then there's the political angle: She said that Mayes, a Democrat like Hobbs, has "other relationships with the officials that may have been involved in the alleged scheme.''
The bottom line, said Yee, a Republican, is her request that Mayes either transfer the entire case to Mitchell "or an independent county attorney for review and potential action.''
"That is the only action that will ensure the integrity of the investigation and avoid the duplication of efforts you raise as a concern in asserting sole jurisdiction,'' the treasurer wrote to Mayes.
Richie Taylor, the attorney general's press aide, said a formal response is being prepared for Yee. But he disputed her contentions that there is any sort of a conflict.
He said, DCS will get outside counsel to represent it during the investigation. And Richie said that no one from the Attorney General's Office has given them any legal advice to date on awarding contracts for foster care.
Richie also rejected the idea that party affiliation matters.
"The attorney general is a Democrat,'' he acknowledged. "But she has to be able to investigate all allegations of criminal wrongdoing.''
And Richie said that most of the attorneys in the office are career staffers who have been there through various administrations, though he agreed that a final decision on this case, like all others, would have to come from Mayes.
Separately, Yee wrote to Mitchell, also a Republican, asking her to conduct the investigation because of the same conflicts she told Mayes make it inappropriate for the attorney general's office to proceed. And the treasurer said she can provide the county attorney with whatever she needs.
"My office has independent authorities to access and review all agency records,'' Yee wrote.
The treasurer also made a separate media post declaring that "giving state dollars to political donors is a grave misuse of public funds.'' But Yee said that is simply a statement of what she believes, not that she has prejudged the case.
"The taxpayers of Arizona deserve to know how their hard-earned money is being spent,'' she told Capitol Media Services . "I'm calling for financial accountability.''
Hobbs press aide Christian Slater called this a "partisan stunt by Treasurer Yee,'' saying any investigation will show that the governor's administration "put the best interests of Arizona first.''
Sen. T.J. Shope, who asked for the investigation, said he personally has no preference on who conducts it. But the Coolidge Republican told Capitol Media Services that doesn't mean either the attorney general or the county attorney needs to step away.
"I don't agree that one investigation necessarily harms the other,'' he said.
At the heart of whatever probe will go forward is the fact that Sunshine gave $100,000 to a special fund that Hobbs had set up to pay the cost of her 2022 inaugural, second only to $250,000 from Arizona Public Service. All totaled the event, which cost just $207,000, gathered close to $1.9 million from various donors, with the governor able to use the balance aside for political purposes including electing Democrat lawmakers.
There also was another $300,000 donated by Sunshine to the Arizona Democratic Party.
All this came as the state was deciding whether to increase the amount of money DCS was paying to Sunshine for out-of-home care for foster children.
Shope, who asked for the criminal investigations, separately wants answers from David Lujan, Hobbs' pick to head DCS, about why a decision was made to give what he said is as 60% increase in what it is paying Sunshine. Shope, who chairs the Senate Committee on Health and Human Services said what he has seen "can only be described as a pay-to-play scheme coordinated between Gov. Katie Hobbs' Office, your department, and political donors.''
And he also noted there's the 2022 death of the child at Sunshine who suffered from diabetes when staff there allowed him to refuse to take his insulin which he needed to stay alive.
Shope told Lujan he wants to know how his agency evaluated Sunshine and what criteria were considered when agreeing to give the company a reported 60% rate increase "given the current budget shortfall facing our state and this particular provider's more than troubling history of child welfare.''
Agency spokesman Darren DaRonco said Shope was told a response is being prepared.
"We are working on gathering all of the items he requested,'' he said.
As to the reason for the sharp increase, DaRonco said that Sunshine is one of the largest provides and has about 70% of the beds available for sibling groups, something that has been a critical need for the agency.
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