Administration Publishes Federal Workforce Reductions Guidance to Agencies

The Trump administration continues accelerating efforts to shrink the federal workforce, ordering agencies to submit plans by mid-March for widespread layoffs and program eliminations. This move could have significant implications for the affordable housing industry, as key federal agencies involved in housing policy—such as HUD and USDA-RD —face significant cuts.

According to a memo from the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM), agencies must focus on eliminating functions not deemed statutorily mandated. This directive raises concerns that essential housing and community development programs could be on the chopping block, potentially reducing resources for affordable housing development, rental assistance, and homelessness prevention efforts. The layoffs mark a shift from earlier dismissals, which largely targeted probationary employees. Under the new directive, agencies are required to develop “large-scale reductions in force” that could affect a broader range of workers, including experienced professionals.

The restructuring is being overseen by the Department of Government Efficiency (DOGE), led by Elon Musk, which has already facilitated over 77,000 federal employee buyouts. Musk, who has taken a hands-on role in implementing these cuts, has indicated that agencies will be required to justify positions or risk further layoffs. The Department of Education, for example, is set to transfer many of its responsibilities to state governments—a shift that could foreshadow similar moves in other federal agencies, including HUD. Given the critical role of federal agencies in funding and administering housing programs, these cuts could have far-reaching effects on affordable housing development, rental assistance, and homelessness prevention programs.