Little Hoover Commission Report on Governor’s Reorganization Plan

The Little Hoover Commission has released a report on Governor Newsom’s proposal to split the Business, Consumer Services, and Housing Agency (BCSH) into two separate agencies. Overall, the Commission recommends that this plan be approved along with several specific recommendations.

The new California Housing and Homelessness Agency would perform oversight, administration, and coordination for the state’s housing and homelessness efforts, including resources and policy development. The new Business and Consumer Services Agency would focus on coordinating standards and best practices for licensing, enforcement, and education in the oversight of various business and professional licensing departments and boards. For full details on the plan, including which entities would be housed under each agency, please see the Governor’s Reorganization Plan.

The Little Hoover Commission has a statutorily required role when the Governor submits a reorganization plan for executive branch agencies. The Commission must hold hearings, receive public input, and issue a report to the Governor and Legislature on whether the plan should go into effect. For this proposed reorganization of the BCSH Agency, the Commission recommends that this plan be approved. The Commission believes that the reorganization could facilitate the construction of more affordable housing, improve consumer protection, and enhance opportunities for economic growth. Further, by dividing up the current agency into distinct program areas, this could allow for greater leadership focus and coordination. 

In addition, the report outlines five recommendations that should be implemented through companion legislation. They indicate these recommendations will help achieve the goals of the reorganization plan by enhancing overall efficiency and oversight, while also improving affordable housing reforms. The five recommendations are:

1. Require an examination of all homeless programs and assess whether any currently in other agencies should be overseen by the new California Housing and Homelessness Agency.
2. Reduce the administrative burden placed on both those providing and consuming homeless services by streamlining and aligning program, reporting, and application requirements.
3. Require reports from both new agencies on a set timeline that detail progress on specified metrics.
4. Establish a formal mechanism for stakeholder feedback on implementation.
5. Enact a Memorandum of Understanding between the Governor and the Treasurer to create a unified application and review process for financing affordable housing.

During the public input process, CSAC testified in support of the Governor’s reorganization plan at the Little Hoover Commission hearing on Thursday. While highlighting that this new agency could lead to better alignment and coordination for homelessness programs, CSAC also noted that California still lacks a comprehensive homelessness system with clear lines of responsibility, accountability, and reliable funding to meet the diverse and complex needs of California’s unhoused population. CSAC’s comments about the administrative burden and funding complexity for existing homelessness programs were specifically cited in the Commission’s recommendation for streamlining and aligning program reporting and requirements.

The next step for the reorganization plan is consideration by the Legislature. The Senate and Assembly have 60 days from when the plan was submitted to the Legislature to determine if it should go into effect. The plan will become effective on July 5 unless either house adopts a resolution rejecting the plan before that date.