Key Points:

• Amy Edwards Holmes is the new director of the Arizona Capacity and Efficiency Initiative

• Gov. Katie Hobbs announced the ACE Initiative in her State of the State address

• The initiative comes amid repeated claims of “waste, fraud and abuse” from Republicans 

Gov. Katie Hobbs is kicking off her Arizona Capacity and Efficiency Initiative aimed at reducing government spending and optimizing state services with the announcement of a new hire.  

Hobbs announced Tuesday that her ACE Initiative will be led by Amy Edwards Holmes, the previous executive director of the Bloomberg Center for Government Excellence at Johns Hopkins University. Holmes will be tasked with implementing the initiative’s three pillars: saving money, simplifying operations and strengthening with technology.

“To achieve the Arizona Promise, we need to strengthen the capacity of the state to administer programs more efficiently,” Hobbs said in a statement. “Every dollar lost to redundant contracts or technology is a dollar taken away from schools, roads, public safety, and ultimately Arizona families. We are making government work better for the people of Arizona.”

The governor outlined the ACE Initiative in her State of the State address and executive budget in January, saying it could save the state up to $100 million. Hobbs hopes to accomplish that savings by standardizing technology and administrative services, consolidating state purchasing power for bulk discounts and adopting AI use to improve workforce productivity. 

Holmes told the Arizona Capitol Times that the initiative will start out by inviting state employees to pitch their own ideas for cost-saving measures in their departments through a project called the Arizona Efficiency Challenge. 

“This one I’m really excited about because we get a chance through this initiative to engage the state workforce to get some of their best ideas on how we can reduce costs, improve efficiencies or opportunities to innovate with technology,” she said.

Holmes brings federal government experience to her new role, having served as a deputy assistant secretary at the U.S. Department of Treasury and as director of the Task Force on Government Performance for the U.S. Senate Budget Committee. Holmes said in her most recent role at Johns Hopkins, she worked with several local and state governments on efficiency and modernization to improve public services. 

“Arizona has taken the foundational steps that I see other states and governments taking, and now we’ve got to kind of go beyond that, to kind of take it to the next level,” Holmes said.

Another early goal of Holmes’ will be examining the state’s software and technology to create a state enterprise, rather than a patchwork system of various technologies being used at different agencies. 

“In the executive budget, we included a goal of, you know, 3 to 5% of IT savings through laying out the expectation that we want to reduce our costs, and we want to work with the private sector to help do that, to get the best value for Arizona residents,” Holmes said.

The ACE Initiative will also pursue pilot programs of different AI products to identify opportunities to automate tedious administrative tasks. The initiative’s Arizona Innovation Hub will administer “structured pilots and transparent evaluation” of the programs and provide AI training to state employees, according to Hobbs’ executive budget.

Holmes said she has experience implementing those kinds of pilot programs at the Treasury Department, which she said can be “transformational.”

“I’ve seen a lot of progress and cost savings and efficiency gains by modernizing with automation tools and other AI tools that allow us to streamline that work in huge ways and free up our people resources to be able to work on other things that are really important,” Holmes said.

While seemingly similar to President Donald Trump’s Department of Government Efficiency, Hobbs’ office previously told the Arizona Capitol Times that the ACE initiative will not include layoffs of state employees. Instead, Hobbs’ executive budget would create 14 new positions to analyze Medicaid data at the Arizona Health Care Cost Containment System and prosecute bad actors abusing the program. 

After Hobbs announced her ACE Initiative in January, Republican lawmakers laid out their own accountability package of bills aimed at cracking down on “fraud and abuse” at AHCCCS and the Supplemental Nutritional Assistance Program. 

“A veto would allow Medicaid spending to keep growing unchecked, trigger massive SNAP penalties, and cost rural health systems millions in federal grant dollars,” House Republicans said in a Feb. 16 press release. “The responsible choice is to sign this package and protect both vulnerable families and the taxpayers who fund these programs.”

But the governor vetoed all nine of those bills, many of which she already vetoed in previous sessions, saying they would only further burden AHCCCS and the Department of Economic Security as the agencies try to conform to federal reforms to Medicaid and SNAP. 

The ACE Initiative also comes amid repeated criticism from Republicans about “waste, fraud and abuse” within state agencies during the Hobbs administration. Sen. T.J. Shope, R-Coolidge, is once again attempting to pass legislation to prevent influence peddling after reports of a pay-to-play scandal involving a Hobbs campaign donor who received a rate increase for group home beds through the Department of Child Safety.

Hobbs rejected Shope’s bill last year and attempted to add her own ethics reforms to the bill this session, but has so far been unsuccessful.