Commentary: Will the Real USDA Reorganization Plan Please Stand Up?
Last year, 2025, was the 75th anniversary of the U.S. Department of Agriculture’s (USDA’s) affordable rural housing programs. If a spring 2025 plan to reorganize the entire Department is implemented, those and many other USDA programs would be sharply reduced or eliminated.
But is that plan – USDA’s Agency Reduction in Force and Reorganization Plan (ARRP), dated March 2025, still operative? Two recent court filings in the same case provide different versions of reorganization.
A dramatist might have written, “ARRP or not to ARRP? That is the question.” The Housing Assistance Council, in its July 16 newsletter, pointed out that USDA’s proposed ARRP from March of 2025 was only made fully public in July 2026. The ARRP was made part of the public record in a lawsuit challenging the Trump administration’s cuts and reorganizations at a number of federal agencies.
But then in their July 30 HAC News, HAC offers an update — that USDA now says the ARRP “does not reflect USDA’s current plans.” This is from a top USDA official in a second, more recent filing in the same case.
The 2025 ARRP plan for USDA Rural Development (RD), if it comes up again, is especially alarming.
Here is why. It would:
- Consolidate RD subagencies on housing, infrastructure, and business into a single agency.
- Eliminate the RD State Offices and “[a]s needed, State Office staff will be relocated to one of the five [proposed new] USDA Service Centers” in North Carolina, Missouri, Texas, Colorado, and Utah or Wyoming.
- Transform RD’s 76-year-old Section 502 “Single-Family Housing program from a direct origination loan program to a guaranteed loan program. This can result in a decrease of 852 employees.”
The plan further states that “USDA is also exploring transferring Rural Development loan programs to the Small Business Administration and/or the Department of Housing and Urban Development.”
On closing the state offices, in a June 25, 2026, online public briefing and in the latest court filing cited by HAC on July 30, USDA officials said there will be no such closings. It is unclear whether those statements on no closings or the 2025 written plan are true.
The written plan’s last two aims – changing direct loans to guaranteed and moving programs to U.S. Department of Housing and Urban Development (HUD) or Small Business Administration (SBA) – would mostly kill off much of the USDA rural housing function.
In the 502 direct mortgage program, USDA is actually the bank, making and servicing the loan. The federal government is repaid with interest. Since 1950, that program has helped over two million low- and moderate-income rural families become homeowners. Most of them would not have achieved that major part of the American dream without the Section 502 program.
The parallel 502 guaranteed loan program has been around since 1977. In it, loans are made by a private lender and backed by the federal government. These guaranteed loans have historically served higher-income borrowers.
Moving all the Rural Development programs for housing and other functions to HUD or SBA could be a first step in essentially killing them. HUD in particular is not equipped to serve rural areas.
It is also unclear in the ARRP plan what would happen to other USDA housing programs – for example, for farmworker housing and very low-income home repair. Would the ARRP’s moves be a first step to ending all USDA rural housing programs?
Total Rural Development staff under the 2025 ARRP plan would be reduced by 47%. USDA Food and Nutrition Service (FNS) staff would be cut by 46%. FNS administers the SNAP (formerly food stamps) and other nutrition programs and is USDA’s largest budget area. These two agencies for housing and nutrition are the USDA programs that primarily serve low-income people. The RD and FNS reduction percentages are the largest proposed staff cuts in the plan among 18 USDA sub-agencies. Only two others of the 18 have proposed staff cuts of 40% or more.
Overall, the ARRP calls for the elimination or consolidation of at least 41 USDA programs and the elimination of more than 23,000 staff positions.
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