How two states have spent their share of the $1B in cybersecurity grants

More than two years ago, the federal government began handing out millions of dollars to states to shore up their cybersecurity amid a growing threat of ransomware attacks and data breaches.

The much-needed investment will ultimately pay out an unprecedented $1 billion over four years. The State and Local Cybersecurity Grant Program under the 2021 infrastructure law is a first-of-its-kind investment, which has meant states have largely had to create their own playbooks.

At an event hosted this week by Route Fifty, those different approaches were highlighted as two states on opposite coasts detailed how they’ve gone about shoring up their cyber defenses under the historic grant program. 

Of the many decisions left to the states, a key one was to let them determine how they would distribute the grant money to their local governments. The program requires that 80% of funding be passed down to localities. States have two choices in how they do that: cash payments or shared services in lieu of payments.

Washington state chose cash payments. Zack Hudgins, the state’s privacy manager, said the state already offers various shared services like privacy and security training. So it made the most sense, he said, to give localities the autonomy to determine the best uses for the money out of the services already provided—whether it be migrating to the .gov domain or procuring new firewalls.

“The goal was, how do we keep it simple?” Hudgins said during the Route Fifty Innovation Spotlight on the federal grant program. “How do we make it so that they can apply quickly and easily? It was about letting them tell us what their problems were, trying to help the local jurisdictions solve those problems.”

The approach has paid dividends, Hudgins said. Washington received 143 applications in the program’s first year and 189 in the second, with money now allocated for 252 of those projects. Funding applications have ranged in size from $1.3 million to $1,200, depending on a local government’s size and the nature of its request.

New York state took a different path, relying heavily on the shared services approach. 

Prior to the creation of the grant program, New York already had a very successful shared services program that offered, among other services, endpoint detection response tools for its counties. So the state decided to lean into its existing program and has used its allocation to procure multifactor authentication, conduct training and fund scholarships. 

The state has rolled out MFA across its local governments, which Alyssa Zeutzius, the state’s deputy chief cyber officer for policy, said is more sustainable to maintain in the long-term than software licenses and cheaper for the state to procure in bulk at once.

Going the shared services route meant New York could embrace economies of scale and get the most bang for its buck rather than leave it up to individual localities, especially if they have small IT shops.

“We knew that the least resourced were the ones we wanted to hit,” Zeutzius said. “They also are not that well staffed, so they may have one IT person. If we're going to give them a bunch of money, that's going to cost them time to procure and then install and set it up. We really thought how can we as a state spend this money most effectively, hit the most entities, but also make it the easiest for them so that they don't have to pick up the cost of installing or deploying.”

Regardless of whether they chose cash payments or shared services, both states have learned quickly that setting expectations about how much local governments can expect to receive has been key. While $1 billion over four years sounds like a lot, when it is broken down across all 50 states, the number each locality could receive changes dramatically.

“There's over 2,000 entities [in New York] that are eligible for this grant,” Zeutzius said. “If you divide up the $5.8 million that we got in year one, that's about $4,000 and change per entity, if they all apply.”

“I did the math in Texas and found we would maybe get a coffee mug, when we broke it down,” said Brian Gardner, Dallas’ interim chief information officer, at the event.

Because there was little precedent for such a big federal investment in cybersecurity for local governments, states relied heavily on their existing grant-making processes to drive the program.

But planning was made a little bit easier by the Cybersecurity and Infrastructure Security Agency and the Federal Emergency Management Agency providing a template for the required planning document that states needed to have to unlock federal funding. Hudgins said Washington relied on existing relationships across the state, including with its military department, state auditor, secretary of state, school superintendent and others who already had experience with homeland security grants.

“It’s really just trying to build on that, not try and recreate the wheel, try and leverage what we've already done, leverage those relationships and pull people together that had already been working together in some form,” he said.

One major concern for states and localities is future funding. In less than two years, the program is set to expire. Gardner said financial worries about paying for cybersecurity are especially acute for Dallas as other COVID-era funds have also dried up.

“As far as maintaining the technologies and the tools we need to combat [cyber threats], that's going to be an annual cost that has to be absorbed somewhere in the budget,” he said. “When you have other things like police or homelessness that you're having to address, somebody has to give somewhere.”