Defunding of Local Cyber Defense Network Sparks National Security Warnings

Across the country, nearly 19,000 state and local agencies, from schools and hospitals to police departments and water utilities, could soon lose a critical line of defense against cyberattacks.

"The services we provide are services that are needed, especially with under-resourced communities, smaller communities, where they may not have the capabilities to go out and procure cyber defenses," explained Robert Beach, the Chief Technology Officer for Cocoa, Florida.

This service is called the Multi-State Information Sharing and Analysis Center, or MS-ISAC. It's a one-of-a-kind system providing real-time alerts and low-cost security tools to state, local, and territorial governments.

Earlier this year, President Trump signed an executive order shifting more cyber responsibility to states and municipalities. Not long after, the Department of Homeland Security slashed $10 million from the program's budget. Now, the remaining funds, about $27 million, are set to expire at the end of September.

"The President's been very clear that defense of the homeland is the number one priority. Now, that involves the border, it involves missile defense, but it also involves cybersecurity, and protection of our critical infrastructures. And I think it's kind of an own-goal to defund the Multi-State ISAC when you acknowledge the defense of the homeland really is your number one priority," said Rear Adm. (Ret.) Mark Montgomery, the senior director of the Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies.

John Gilligan, CEO of the Center for Internet Security (CIS), which operates the MS-ISAC, says these cuts hit as cyberattacks are increasing.

"What we're seeing across the nation is foreign nation states, drug cartels, criminals looking to make money, are now focusing on, 'Where's the weakest link?' And often the weakest link is the local organizations, the cities, the towns, and school districts, etc," Gilligan told CBN News.

While he agrees states should take more responsibility for their own cybersecurity, some federal support remains essential.

"Roughly 30 percent of our nation's critical infrastructure...water, wastewater, probably being the largest, is run by (local) government organizations...They're the front line of defending this nation," Gilligan said.

Beach, who also serves as an MS-ISAC committee member, says cybersecurity at the local level should be a national security issue.

"We have local governments trying to defend against nation-state actors – the Big Four out there, Russia, China, Iran, North Korea – on municipal budgets... and that's just not a tenable situation for local governments to have to defend against these types of adversaries on municipal budgets," he told CBN News.

To highlight what's at stake, Adm. Montgomery points to Volt Typhoon, a 2024 Chinese operation to infiltrate and then shut down critical U.S. infrastructure.

"They showed their hand with Volt Typhoon. We found them, and I promise you, for everything we found, there's something we haven't found, so there's a lot of risk here," Montgomery explained.

With federal dollars drying up, MS-ISAC has shifted to a paid membership model. About a third of the states that previously used the service are in, although there's concern that others could fall through the cracks.

"We've tried to make the pricing models fit with everyone; they're very reasonable, but not everyone's going to be able to do that. Not everyone's going to be able to subscribe to the service. So it really puts the organizations in a tough situation, and the organizations that need it the most are probably the ones in greatest jeopardy of not receiving services," Beach said.

Congress could step in and use unspent funds from this year's budget. CIS plans to stay on Capitol Hill through the end of the month, pushing lawmakers to keep federal support flowing for local cyber-defense.