Lawmakers Battle for Funding Amid Urgent DCS Budget Crisis

On Thursday, the Joint Legislative Budget Committee sanctioned a $16 million funding transfer within Arizona’s Department of Child Safety (DCS) after Republicans raised concerns about potential funding shortfalls for foster group homes, set to expire on March 24.

The committee’s decision highlighted the escalating partisan tension with Democratic Governor Katie Hobbs concerning state financial management. Lawmakers engaged in a heated debate over the accountability for DCS’s budgetary issues after an intense week of disputes, culminating in a GOP-led press event and the formation of a committee on March 17 to scrutinize Hobbs’ budget oversight.

House Appropriations Chairman David Livingston, R-Peoria, revealed he received a DCS letter on March 11 indicating that a line item transfer was imperative by March 24. The initial letter was dated March 5, but was delayed as it was routed to the Joint Legislative Budget Committee staff rather than directly to Livingston.

Speaker Steve Montenegro, R-Goodyear, criticized the situation, stating, “This financial mismanagement threatens the most vulnerable children in our state. House Republicans will not let this stand.” He further accused the governor of creating the crisis.

DCS had suggested reallocating $6.5 million from kinship care services and foster home placements, but Livingston warned that this amount would leave the department short for the remainder of the fiscal year. “The agency has already exhausted its fourth-quarter allotment even though we’re still in that quarter,” noted House Majority Leader Michael Carbone, R-Buckeye, adding that some care services could run out of funds as soon as April.

In response to concerns, DCS later proposed an additional $10 million transfer from adoption services and other areas to ensure appropriations could last through June 30. This included a $2.2 million shift to extended foster care. The total $16.5 million transfer was ratified during the committee’s March 20 meeting.

Christian Slater, a spokesperson for Governor Hobbs, characterized the funding request as a routine budget procedure. He stated that Republicans have been aware of the department’s financial situation since a meeting on January 29, suggesting they are politicizing standard funding processes.

Richard Stavneak, director of JLBC’s staff, acknowledged the committee was aware of funding issues but lacked precise information on the timing of DCS’s financial shortfall. “Only the agency can determine the exact timing of such a shortfall,” he remarked.

Republicans expressed frustration with what they viewed as miscommunication from Governor Hobbs and her office, with Livingston labeling the department’s letter as “unprofessional” and adding it politicized the issue by evoking dire consequences for children in care.

Alex Ong, DCS’s deputy director of administration, mentioned the department had anticipated the shortfall since the legislative session preceding the current budget and waited to assess expenditures before seeking appropriations.

As the legislature moves forward in addressing DCS funding concerns, the discrepancy between party lines persists. House Democrats attempted to leverage procedural rules to advance a separate $122 million supplemental funding bill aimed at services for developmental disabilities, but negotiations have stalled amidst rising discord.

Livingston emphasized that Republican lawmakers are unwilling to pass funding proposals without substantial reforms to disability policies, describing it as a necessity given the circumstances. “There’s no way we’re passing a supplemental without reforms, given the mismanagement that has led to this crisis,” he asserted.

Critics of the Republican stance, including Slater, have claimed they proposed drastic cuts to the developmental disabilities budget, arguing that the GOP refuses to negotiate in good faith. Meanwhile, House Minority Leader Oscar De Los Santos, D-Laveen, pointed out the inconsistency in Republican concerns over funding requests now that a Democrat holds the governorship.

In concluding remarks, both Livingston and House Assistant Minority Leader Nancy Gutierrez, D-Tucson, expressed optimism about resolving the funding mismanagement by the end of April, emphasizing the need for collaborative negotiation to reach an agreement.