Arizona finally has a state budget agreement. Gov. Hobbs & Republican leaders from the Arizona House and Senate negotiated a compromise budget of nearly $18.3 billion for the fiscal year that begins July 1. In the end it passed with a coalition of some Dems and some Republicans.
Nobody got everything they wanted. From a public health perspective, the most important things to know are that AHCCCS and ADES got the funding and increased personnel counts to be in a better position to meet the enormous administrative challenges they and their members (AHCCCS and SNAP) face because of H.R. 1.
AHCCCS and ADES will be getting about $21M more in state funds to hire more eligibility workers (who are essential to handing the avalanche of incoming H.R.1 red tape). The budget also funds for critical computer upgrades for both ADES and AHCCCS (essential for managing the paperwork burden members will face because of H.R.1. ADOA even got some money to help with the AHCCCS/ADES systems.
Most state agencies got a 2.5% reduction in their general fund operating line items – but ADHS, AHCCCS and ADES were exempt from those cuts.
The end of the session early Saturday morning was raucous. The session Saturday morning at 4:45 a.m. after a long night of rapid-fire voting. Republican lawmakers used the final hours to advance a series of conservative ballot referrals that will bypass Gov. Katie Hobbs and go directly to voters in November.
The measures include proposals affecting voting rules, red-light cameras, and passing a ballot referral that, if it passes, would negate the voter initiative that will put some financial guardrails on the ESA voucher giveaway. They also put a measure on the ballot that will make it a lot harder for people to vote by mail because they’d have to go in and prove who they are rather than using signature verification on the mail in ballot.
While the legislative session is over, many of the year’s most consequential policy debates have simply shifted to the November ballot.
AZ Legislature ends 2026 session after late-night GOP push to send conservative agenda to voters
AHCCCS: More Eligibility Staff & Better Computer Systems
H.R. 1 creates a barrage of new paperwork requirements for Medicaid agencies and their members. Beginning with renewals that start 1/1/27, most adults enrolled through the Medicaid expansion population will need to renew their eligibility every six months instead of once per year. That doubles the workload among those 500,000 members and AHCCCS eligibility workers.
On top of that, the same group (about 500,000 people) will need to document that they’re meeting the new federal work and community-engagement requirements or qualify for an exemption. Better software and hardware will be needed in order for people to be able to report their compliance and ADES and AHCCCS will need well over 100 more eligibility staff to process the redetermination applications.
You can read more about the federal requirements in our earlier post:
https://azpha.org/2026/06/08/
AHCCCS will be getting $10.2M to help implement the H.R. 1 eligibility changes. Of that amount, $4M is specifically designated for information-technology upgrades. The budget also provides $12.9M to ADOA to continue replacing the AHCCCS mainframe system.
That investment is badly needed. AHCCCS will be expected to process more eligibility checks and help members navigate more complicated rules (work requirements). Trying to do that with outdated computer systems would be a recipe for failure. The biggest risk is not that large numbers of people will intentionally refuse to follow the new rules. The bigger risk is that eligible people will lose their health insurance because the paperwork is confusing, the notices are unclear or the computer systems do not work well enough.
I don’t really know whether this is enough money… but I do know it’s a big improvement from where we are today. Of course – it’ll be super critical for both ADES and AHCCCS to use this money wisely, be clear to IT contractors about what they want- and to hold them strictly accountable for timelines and quality testing. Now, on to ADES.
ADES: An Ancient Computer System & the Coming Paperwork Avalanche
ADES also got important resources in the compromise budget. They play a big role in processing eligibility for AHCCCS and SNAP. They’re already under strain and will face more work when federal benefit rules become more complicated in January.
The budget provides ADES with $10.8M for SNAP error-rate reduction workload and $6.1M for costs related to its “legacy” mainframe systems. “Legacy” is an unusually generous word choice. “Ancient” would be more accurate.
Arizona is asking ADES employees to administer increasingly complicated programs using computer systems that were designed in a different era. The new funding will not solve every problem, but it should help ADES hire more staff and begin addressing some of its most serious technology limitations.
