CalHFA board hears update on proposed state housing agency reorganization and Audit & Risk Committee’s new enterprise risk framework

Board members were briefed on two governance items: a proposed state agency reorganization and the Audit & Risk Management Committee’s new enterprise risk framework and auditor selection process.

Rebecca Franklin and Undersecretary Grant summarized the governor’s plan to split the existing Business, Consumer Services and Housing (BCSH) agency into two entities — one with a consumer focus and another with a dedicated housing focus — subject to review by the Little Hoover Commission and the state legislature. Franklin said the Little Hoover Commission will submit a report to the legislature in late May or early June; if the legislature takes no action to reject the plan during the following 30–60 days, Franklin said the reorganization could take effect July 1, 2026 and BCSH would be dissolved.

Delilah Sotelo, chair of the Audit & Risk Management Committee, reported that the committee expanded its scope to include risk management and received a presentation from Kelli (Kelly) Madsen, director of enterprise risk and special initiatives, on an agency‑wide risk framework. Sotelo said the framework is intended to “lay a mantle” over agency activities to identify key risks, establish evaluation pools and inform the board’s strategic planning; the committee expects a fuller presentation in August ahead of strategic planning work later in the year.

Sotelo also said the committee completed an RFQ to select an external auditor; she said the committee intentionally defined outreach and selection criteria to encourage responses from small and diverse firms and not just the largest national accounting firms. Director Prince and other board members asked whether the RFQ criteria might unintentionally limit smaller firms; staff and Sotelo said outreach would emphasize opportunities for small and diverse firms and cited a prior successful selection of a smaller firm in another agency that performed well.

Board members asked questions about roles, responsibilities and how enterprise risk assessments will inform strategic planning; Sotelo said the framework will be integrated into the board’s three‑year strategic planning process. No formal board vote was required for the updates.

The board requested continued engagement and updates from the Audit & Risk Committee as the framework and auditor selection process proceed.