A Cybersecurity Funding Cliff: What MS-ISAC’s Shift Means for Vendors Targeting State and Local Governments

For nearly two decades, the Multi-State Information Sharing and Analysis Center (MS-ISAC) has been the go-to resource for state, local, tribal, and territorial (SLTT) governments seeking affordable, reliable cybersecurity support. Backed by the Department of Homeland Security, MS-ISAC offered real-time threat intelligence, intrusion detection tools, incident response, and domain blocking, at no direct cost to its nearly 19,000 member organizations.

That era is ending.

The Department of Homeland Security announced it will not renew its $27 million annual federal funding for MS-ISAC. Starting October 1, 2025, governments that relied on MS-ISAC will need to pay for membership themselves. A new tiered fee-based model will tie membership costs to the entity’s operating budget. Fees will start around $1,495/year for small districts and scale into the tens of thousands for larger counties and states.

Complicating matters further, under the State and Local Cybersecurity Grant Program (SLCGP), agencies are prohibited from using federal cyber grant dollars to pay for MS-ISAC memberships. This means many jurisdictions cannot fall back on the grants they already receive, leaving them to cover costs out of general funds or state-level appropriations.

This abrupt change creates an unfunded expense for thousands of local governments—right as adversarial hackers escalate attacks on 911 centers, jail systems, utilities, and schools.

Why This Matters for Vendors

The impact for SLTT governments is serious. For cybersecurity vendors, it offers a rare market-making moment.

Until now, federal funding has kept MS-ISAC services insulated from competition. With Washington stepping back and grant dollars off the table, governments face two choices:

1. Reallocate their own budgets to cover MS-ISAC fees, or
2. Seek supplemental or alternative solutions in the private market.
   

This dynamic is creating brand-new spending opportunities across thousands of agencies that have historically underinvested in cybersecurity.

What GovSpend Data Shows

GovSpend users are already seeing how this shift is rippling across budgets and procurement conversations:

• Los Nietos School District (CA) approved a $1,000/year membership from its General Fund. This is a small district, but the decision signals that even resource-constrained schools are willing to prioritize cybersecurity now that federal support has ended.

• In Okaloosa County (FL), officials estimated it would cost $850,000 annually for the entire state of Florida to cover MS-ISAC memberships. This sparked debate about whether the state should step in to support counties—a clear sign that cybersecurity spending is moving up the policy agenda.

• Benton County (OR) received new pricing that pegged its annual MS-ISAC cost at $30,000. For a mid-sized jurisdiction, this is a significant unplanned expense that could prompt evaluations of alternative vendors offering more comprehensive coverage at a similar price point.

Meeting minutes across multiple jurisdictions reveal a common theme: MS-ISAC is valued, but not guaranteed. Some officials describe it as “nice to have” if budgets allow, while others argue it’s essential. This creates an opening for vendors to demonstrate ROI and position their solutions as must-have investments.

A number of agencies have also recently posted RFPs and RFIs relating to cybersecurity, including:

• Kodiak Island Borough (AK) is requesting proposals to upgrade firewalls, switches, and wireless access points across five locations within Kodiak Island Borough, due on September 19, 2025.

• The City of Fernley (NV) is calling for proposals from qualified Managed Service Providers (MSPs) to provide co-managed IT services under a hybrid IT model. Their goal is to enhance operational efficiency, strengthen cybersecurity, maintain compliance, and ensure the availability of mission-critical systems across all City departments, with bids due on September 26, 2025.

• The Texas Local Government Purchasing Cooperative is soliciting SaaS products and cybersecurity assessment services for cooperative purchasing, due on October 2, 2025.

These examples show what’s at stake: agencies are acknowledging the funding cliff, running the numbers, and starting to make decisions.

The Opportunity for Cybersecurity Companies

This environment is creating fertile ground for vendors who can position themselves strategically.

Budgets are opening up: Agencies that never had dedicated cybersecurity line items are creating them. What was once funded at the federal level is now being absorbed locally.

Procurement activity is accelerating: Districts, counties, and utilities are already approving expenditures. More RFPs are expected in the coming months as governments formalize their needs.

Agencies are rethinking coverage: Some will simply pay for MS-ISAC. Others will see this as a moment to evaluate whether alternative vendors offer better value for the same dollars.

Smaller jurisdictions need affordable solutions: A $1,495 membership may be feasible for some, but many small school districts, towns, and special districts will look for low-cost, high-impact private-sector tools.

Larger jurisdictions need enterprise-level support: Counties facing $30,000 annual costs may expect more than MS-ISAC provides, and will be open to managed services, advanced threat detection, and strategic advisory work.

This is the kind of systemic budget shift that creates lasting sales opportunities for vendors who act quickly.

How GovSpend Helps Vendors Capture the Market

Cybersecurity companies need more than headlines—they need actionable intelligence on who is buying, when, and how much they are willing to spend. GovSpend provides that edge:

• Track local procurement in real time: See when districts like Los Nietos or counties like Okaloosa are approving cybersecurity expenditures and actively seeking proposals.

• Identify agencies by budget size: With MS-ISAC’s pricing tied to operating budgets, GovSpend helps vendors segment prospects and tailor offerings by tier.

• Quickly spot early buying indicators: GovSpend’s AI tools search through complex contracts and long agency meeting transcripts, swiftly surfacing the most relevant purchasing signals for your business and delivering potential opportunities in seconds.

• Gain direct access to decision-makers: The GovSpend platform connects vendors to procurement officers, IT directors, and commissioners making funding decisions—streamlining outreach.

The Bottom Line

The end of federal MS-ISAC funding—and the added complication that SLCGP grants can’t be used to offset membership costs—is a cybersecurity inflection point for SLTT governments. For public agencies, it means scrambling to cover new expenses. For cybersecurity companies, it means thousands of potential customers are suddenly in the market for services—many for the first time.

Using GovSpend data, vendors can map the market and spot agencies under pressure, track procurement activity and emerging budget lines, and engage decision-makers early to shape RFPs and deals.

Cybersecurity providers: This is your window. Federal dollars are gone, but local governments still need protection. The question is—will it be MS-ISAC alone, or will your solutions fill the gap? With GovSpend, you have the data to make sure you’re at the table when those decisions are made. Request a demo today.