The Arizona Department of Child Safety is increasing the amount of money families receive for the care of foster children in the state.
Gov. Katie Hobbs announced Thursday that the department will increase daily rates for foster families by 50%. The governor's office says this equates to an average increase of $1,000 to $1,700 per month per child, depending on the level of care they receive.
The fee increase affects licensed foster families caring for children over the age of six, including kinship families caring for children in the foster care system (also known as kinship foster families).
The increase comes as Arizona faces a shortage of foster care providers and will need an estimated 1,046 additional foster care facilities over the next 12 months, the governor's office said.
From 2017 to 2025, the number of licensed child care facilities in Arizona decreased by 62%, and the number of licensed beds also decreased by 62%, according to a press release.
family-like setting
The wage increase should also support the Hobbs administration's stated goal of increasing the number of foster children placed in “family-like” environments rather than group homes run by operators under contracts with DCS.
In January, department officials told the state Legislature that the number of Arizona children in group homes has steadily declined in recent years. According to the ministry, that number decreased from 1,995 in 2021 to 1,732 in 2024.
The department estimates there will be 1,457 foster children in group homes by 2026.
But despite the decline, lawmakers had to approve emergency funding transfers last year to avoid a DCS budget shortfall due to soaring group home care costs.
Congress ultimately approved moving millions of dollars from the agency's budget to avoid that shortfall, including $6.5 million from a fund for programs to place children with families or place them in foster care, as those programs were expected to stay within the budget.
group home controversy
The shortfall was caused in part by a 2018 law that limited federal funding for children in congregate care to 14 days, Congressional budget analysts and the department told lawmakers last year.
Before this law took effect, states received grants that covered 67% of these costs indefinitely, but now states must cover 100% of the costs for children who stay in group homes for more than 15 days.
In 2021, the state received $45 million in federal reimbursements for children in foster care, some of whom were grandfathered and therefore not affected by the 2018 law. The state received only $5.3 million in reimbursement in 2024.
In March, DCS Deputy Director-General for Administration Alex Ong also said costs had increased due to higher reimbursement rates for group home providers due to renegotiated contracts.
The decision to give one particular provider, Sunshine Residential Services, higher contract rates has come under increased scrutiny over the past year after The Arizona Republic reported that the group home provider donated to Hobbs' campaign in 2022 and subsequently received a significant rate increase. This prompted an ongoing investigation by Democratic Attorney General Chris Mays and Republican Maricopa County Attorney Rachel Mitchell.
The Hobbs administration defended the decision, saying the state cannot afford to lose its contract with the state's largest group home bed provider.
And the governor has long denied that donations influenced his decision to give Sunshine Residential higher interest rates.
“At the time these decisions were made, I didn't even know they were being made,” Hobbs said.
But Republicans continue to criticize Hobbs, saying the situation is an example of “pay to play.” House Speaker Montenegro (R-Goodyear) has indicated the House will conduct its own investigation, and Senate President Warren Petersen (R-Gilbert) has said he supports impeaching the governor.
Meanwhile, Hobbs said he is considering new legislation after vetoing last year's bill that would have required companies seeking government contracts to disclose political contributions.
