NSAC's Blog

More than 570 Businesses, Organizations, and Local Governments Oppose Elimination of USDA Rural Development

June 13, 2017

Photo credit: Caitlin Joseph.

For more than 20 years, the U.S. Department of Agriculture’s (USDA) Rural Development (RD) Mission Area has helped rural communities develop and expand thriving businesses, create new economic opportunities, and build and maintain housing, water, electric, telecommunications, and other rural infrastructure. At a time when nearly 85 percent of America’s persistent poverty counties are in rural areas and rural populations are declining for the first time in history, USDA’s Rural Development mission is as important as ever. This May, however, rather than strengthening its RD toolbox, the Administration proposed devastating cuts to RD funding as well as the elimination of the RD Mission Area and Under Secretary.

The National Sustainable Agriculture Coalition (NSAC) has actively opposed both the President’s proposed budget cuts and the Secretary’s plans to eliminate the Mission Area and Under Secretary. On Monday, June 13, NSAC joined hundreds of local governments, businesses, and farm and rural development organizations in a letter asking the House and Senate to take action to protect RD’s status as a USDA sub-cabinet level Mission Area. The letter also opposes the Administration’s proposed $1 billion (well over $3 billion in program financing) in funding cuts for fiscal year (FY) 2018.

The Reorganization

In part, the Department’s restructuring plan stems from a congressional directive included in the 2014 Farm Bill that instructed USDA to create a new position, Under Secretary for Trade and Foreign Affairs. Nothing in that directive, however, instructed or mandated USDA to eliminate another Under Secretary position in order to introduce the Under Secretary for Trade position. Despite no requirement to do so from Congress and the decades of high-impact work done by RD, the Secretary announced on May 11, 2017 that he would eliminate the RD Under Secretary and create a new, lower-level position of Assistant to the Secretary. Unlike the position of Under Secretary, the new Assistant position does not require Senate confirmation.

Though the Administration has claimed that the new Assistant to the Secretary will have more access to the Secretary than does the current Under Secretary, Under Secretaries already wield significant influence and can easily communicate directly with the Secretary. RD is currently divided into three agencies: the Rural Housing Service, Rural Utilities Service, and Rural Business-Cooperative Service. It oversees a loan portfolio of nearly $216 billion, and delivers a multitude of programs to rural communities across the country on a daily basis, programs which require significant oversight and staff capacity. It is yet unclear whether the new Assistant to the Secretary will have any staff support, as the RD Under Secretary currently does. It is also unclear how these decisions link to the President’s FY 2018 budget request, which proposes to reduce RD staff by nearly 1,000 individuals, make deep cuts to rural infrastructure programs, and completely eliminate USDA’s rural business portfolio.

Given that the recently passed FY 2017 appropriations legislation provides funding specifically for the Office of the Under Secretary of Rural Development, we expect that USDA will need to get appropriators to sign off on its plan to reallocate money designated for the position of RD Under Secretary and staffing for the current version of the Mission Area. Because of the power that congressional appropriators wield in these cases, NSAC and our allies will be looking to Congress to serve as champions for rural communities by stopping the elimination of the RD Mission Area and Under Secretary (see final section).

Serious Implications for Rural Communities

Taken alone, the elimination of the RD Mission Area and Under Secretary position are already cause for concern. Combined with the President’s proposed budget cuts, however, the situation becomes far more alarming.

Rural communities are struggling. Among the myriad challenges these communities are currently facing are: volatile commodity markets, outmigration and population decline, aging farmer and resident populations, declining tax bases, persistent poverty, limited access to affordable small business capital, and an inadequate infrastructure. As noted in NSAC’s sign-on letter with the National Rural Housing Coalition and nearly 600 other organizations:

[Rural] counties in America are in worse condition than big cities, suburbs and small or medium metro areas. Rural communities, and the people who live in them, have higher poverty and unemployment rates as well as a higher incidence of substandard housing and rent overburden when compared to metropolitan areas.

Virtually every community in the country with inadequate drinking water has a population of 3,300 or less. Although much of the country has seen recovery from the financial crisis, rural America still lags behind. The decade’s long trend of community bank closure and consolidation has hit rural areas particularly hard. The number of community banks in the United States has declined by an average of 300 per year over the past 30 years, according to data from the Federal Deposit Insurance Corporation, and a collapse in the price of agricultural commodities has added stress on many small towns and farming communities.

For decades RD has been a source of hope and support for rural communities in crisis. Though RD has for years been “doing more with less,” – RD has had to reduce total staff by nearly 3,000 full-time positions over the past two decades – it has continued to provide critical programs and customer service to rural residents.

For example, in FY 2016 alone RD made available over $29 billion in loans, guarantees, grants, and related assistance to over 157,000 individuals, businesses, non-profit corporations, cooperatives, and governments. RD’s total loan portfolio includes over 1.3 million loans that amount to nearly $216 billion. The RD Mission Area has a long track record of success and there is widespread agreement that they have managed this massive portfolio well.

If the President’s proposed cuts to RD were approved, programs would be cut by $867 million (31 percent). Virtually every direct loan and grant program would be zeroed out and investments including broadband services, electrical lines, drinking and waste-water treatment facilities, health clinics, renewable energy projects, and housing developments would be at risk. Without these programs and investments, many rural communities would be in the unenviable position of having to either raise local taxes or curtail services and defer essential infrastructure, maintenance, and construction projects.

Public Comment Opportunity

In public statements about the reorganization, USDA stated that the idea of improved “customer service” was one of the underpinnings of the suggested changes. The Department then opened a public comment period to allow stakeholders to comment on whether or not the proposed reorganization would, in fact, improve customer service. That comment period remains open until June 14. Despite the fact that USDA is still receiving input from rural stakeholders, Secretary Perdue announced yesterday that he had already moved forward with the plan and hired his new assistant, two days before a public comment period on the reorganization closes.

As the 600 signers on yesterday’s letter make clear, USDA’s decision to dismantle its rural development mission, staff, and programs will have long-lasting consequences for the nearly 46 million Americans who live in rural communities.

NSAC will work with the House and Senate Appropriations Committees to stop the elimination of the Rural Development Mission Area and Under Secretary position. We will also work with appropriators to ensure adequate funding for rural development programs in FY 2018 appropriations legislation.

Categories: Budget and Appropriations

2 responses to “More than 570 Businesses, Organizations, and Local Governments Oppose Elimination of USDA Rural Development”

  1. Carol says:

    I just wanted to say Thank you for your work.

  2. Reana Kovalcik says:

    Thank you, Carol!