ECONOMIC AND BUDGET ISSUE BRIEF

Federal Funding for Homeland Security: An Update

The terrorist attacks of September 11, 2001, heightened 

Congressional and public interest in federal spending for 

homeland security. Funding for that purpose is divided 

among more than 200 appropriation accounts within 

the federal budget and involves many different functional 

areas of the government. Much of the funding resides 

within accounts that primarily finance programs not 

classified as homeland security activities. That accounting 

arrangement makes it difficult for budget analysts to 

identify and track homeland security spending.

Current data on funding for homeland security are provided in annual reports to the Congress by the Administration’s Office of Management and Budget (OMB). On 

the basis of those reports, the Congressional Budget 

Office (CBO) estimates that federal resources dedicated 

to homeland security will total $49.1 billion in 2005—

nearly triple the amount allotted for that purpose before 

September 11.1 For fiscal year 2006, the Administration 

has proposed a slight increase in homeland security funding, to $49.7 billion (see Table 1).2

What Is Homeland Security?

The executive branch has defined homeland security as 

“a concerted national effort to prevent terrorist attacks 

within the United States, reduce America’s vulnerability 

to terrorism, and minimize the damage and recover from 

attacks that do occur.”3 The activities that make up that 

mission are divided into six categories:

B Intelligence and warning—Includes efforts to detect 

threats and monitor potential sources of terrorism 

before attacks occur within the United States. Those 

activities are carried out primarily by the Department 

of Homeland Security (DHS).

B Border and transportation security—Encompasses airline security and inspection of cargo at points of entry 

into the United States to prevent unauthorized individuals or weapons from entering the country. Those 

activities are performed primarily by DHS’s Directorate of Border and Transportation Security (BTS), 

which includes the Transportation Security Administration (TSA)—created in November 2001 in the 

wake of the terrorist attacks—the Bureau of Customs 

and Border Protection (CBP), and the Bureau of 

Immigration and Customs Enforcement (ICE).

B Domestic counterterrorism—Consists largely of federal 

law-enforcement and investigative activities aimed 

at identifying and apprehending terrorists. Primary 

responsibility for those operations resides with the 

Federal Bureau of Investigation (FBI), an arm of 

the Department of Justice.

B Protection of critical infrastructure and key assets—Includes ensuring the physical security of critical infrastructure (for example, bridges and power plants), 

national landmarks, and federal buildings and installations. The Department of Defense (DoD) receives the 

largest share of funding for this purpose.

CBO A series of issue summaries from

the Congressional Budget Office

JULY 20, 2005

1. This brief updates estimates of homeland security spending originally presented in Congressional Budget Office, Federal Funding 

for Homeland Security (April 2004), available at www.cbo.gov.

2. All years referred to in this brief are fiscal years.

3. See Office of Homeland Security, The National Strategy for Homeland Security (July 2002), p. 2, available at www.whitehouse.gov/

homeland/book/index.html; Office of Management and Budget, 

2003 Report to Congress on Combating Terrorism (September 

2003), available at www.whitehouse.gov/omb/inforeg/

2003_combat_terr.pdf; and Office of Management and Budget,

Budget of the United States Government, Fiscal Year 2006: Analytical Perspectives (February 2005), pp. 37-52, available at 

www.whitehouse.gov/omb/budget/fy2005/pdf/spec.pdf.
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ECONOMIC AND BUDGET ISSUE BRIEF

Table 1.

Total Federal Resources Allocated for Homeland Security, 2001 to 2006

(Budget authority in billions of dollars)

Sources: Congressional Budget Office; Office of Management and Budget.

Note: Components may not sum to totals because of rounding. All years referred to are fiscal years.

a. The figures in this brief differ slightly from those published by the Office of Management and Budget as part of the Administration’s 2006 

budget request because CBO used different estimates of spending for mandatory and fee-funded activities.

b. Excludes offsetting collections and receipts, which are recorded as negative budget authority. (For 2004, those totaled $5.0 billion. For 

2005, according to CBO’s estimates, they will total $5.3 billion.)

B Defense against catastrophic threats—Covers research, 

development, and deployment of technologies and 

medical measures designed to detect and counter the 

threat posed by weapons of mass destruction (biological, chemical, or nuclear).

B Emergency preparedness and response—Encompasses 

efforts, primarily by DHS and the Department of 

Health and Human Services (HHS), to mitigate the 

effects of future terrorist attacks, including creating 

federal-response plans and providing equipment and 

training for local “first responders” (such as firefighters, police, and medical personnel).

On the basis of data reported by OMB, CBO estimates 

that nearly 37 percent of the $49.1 billion provided for 

homeland security in 2005 is designated for border and 

transportation-security operations, and another 31 percent is allotted for the protection of critical infrastructure 

and key assets. The remaining funds are for emergency 

preparedness and response (17 percent); domestic counterterrorism (8 percent); defense against catastrophic 

threats (7 percent); and intelligence and warning (1 percent).4

Other definitions of homeland security are possible and 

could encompass a different set of activities and funding 

amounts. The executive branch’s definition focuses only 

on those activities aimed at preventing or responding to 

terrorist attacks within U.S. borders and not, for example, on those devoted to combating terrorism overseas. 

Budget reports separately account for overseas activities—

such as security at U.S. embassies and military facilities 

and some intelligence efforts classified as Overseas Combating Terrorism Funding (OCTF). OMB estimates that 

OCTF in 2005 totaled about $11 billion; of that 

amount, DoD and other national security agencies received over $7 billion, and the Department of State, 

about $1.7 billion. 

There is not a clear distinction between activities aimed 

at making the nation more secure against terrorist attacks 

and those directed toward other purposes. For example, 

of DoD’s expenditures, OMB includes in the homeland 

security category only security at domestic military bases 

and some defense research facilities, as well as certain 

activities aimed at defending the nation against weapons 

of mass destruction. And even that categorization is not 

always clear. For instance, it does not include the security 

and counterterrorism operations that DoD undertook in 

response to the September 11 attacks—such as Noble 

Eagle, which encompasses combat air patrols over the 

2001 2002 2003 2004

Estimated 

2005a

Requested

2006a

Discretionary Budget Authority

Regular appropriations 15.0 17.1 32.2 36.5 43.0 42.2

Supplemental appropriations 3.6 12.3 5.9 0.1 0.6 0

Fee-funded activities 0.7 2.0 2.6 3.2 3.3 5.4

Mandatory Spending _1.5 1.7 1.8 1.9 2.2 2.2

Gross Budget Authorityb 20.7 33.0 42.5 41.7 49.1 49.7

4. Numbers in the text and tables of this brief may not add up to 

totals because of rounding. For further discussion of the various 

aspects of homeland security and their associated funding levels, 

see Office of Management and Budget, Budget of the United States 

Government, Fiscal Year 2006: Analytical Perspectives, p. 37.
ECONOMIC AND BUDGET ISSUE BRIEF

FEDERAL FUNDING FOR HOMELAND SECURITY: AN UPDATE 3

United States and increased security at military facilities. 

(The 2005 costs of Noble Eagle are not yet available; in 

2004, the cost of that operation was almost $4 billion.)

A similar difficulty in clearly categorizing homeland security activities arises with regard to emergency preparedness and response, especially when considering assistance 

for first responders. To meet the Administration’s definition of homeland security, the primary purpose of that assistance must be to deal with the aftereffects of terrorism. 

However, because first responders employ their equipment and training in a wide range of public-safety activities, it is difficult to distinguish between their expenditures for homeland security and expenditures for other 

functions.

In preparing this brief, CBO used the executive branch’s 

definition for two reasons: it is narrow enough to permit 

meaningful analysis, and it allows analysts to use data that 

OMB has collected over the past few years and that have 

been considered by policymakers during the legislative 

process.

Homeland Security and the Federal 

Budget

Most funding for homeland security is classified as discretionary spending and provided through appropriations, 

which for 2005 total $46.9 billion. The collection of fees, 

mostly by TSA, offsets over $3 billion of that amount. 

Mandatory spending finances some additional homeland 

security activities; CBO projects that such funding will 

total just over $2 billion in 2005.5

 Nearly three-quarters 

of that mandatory amount is spent for border protection 

and enforcement of immigration laws; according to 

CBO’s estimates, most of those expenditures will be offset 

by immigration and customs user fees, which the budget 

records as offsetting receipts.

The allocation of homeland security funding to over 200 

appropriation accounts within the federal budget substantially complicates efforts to track such spending. In 

addition, agencies do not separate that funding in their 

accounts from money appropriated for their other activities. Indeed, much of the money for homeland security 

activities resides within accounts that also finance spending not related to homeland security, such as departmental salaries and expenses. That accounting practice makes 

it difficult to clearly identify homeland security funding 

as it moves through the appropriation process.

Section 889 of the Homeland Security Act of 2002 

directed OMB to produce an annual report on homeland 

security funding to accompany the President’s annual 

budget submission. The reports, which contain data on 

homeland security spending collected by federal agencies 

and updated throughout the fiscal year, do not always 

provide a consistent picture of expenditures.6 Classifying 

and reporting spending on homeland security activities 

require judgments about particular projects and programs. In addition, under the current data-collection process, definitions of homeland security and current year 

and prior year funding levels are frequently modified and 

updated. (It is particularly hard to reliably compare the 

estimated 2005 funding level of $49.1 billion with the 

data collected before 2001.)7 Those limitations remain 

even after the consolidation of a number of activities under the new Department of Homeland Security because 

appropriation accounts and programs are essentially the 

same as they were before being shifted to the new agency.

5. Mandatory spending refers to funding that is not subject to 

annual appropriations. It includes some programs and activities 

that have their own built-in financing (such as user fees and 

receipts), which allows them to operate without annual 

appropriations.

6. Before 2004, that information was provided by OMB in an 

annual Report to the Congress on Combating Terrorism, as required 

by section 1051 of the National Defense Authorization Act of 

1998.

7. Before 2002, OMB’s annual reports focused on the definition of 

“combating terrorism,” which included overseas activities. Beginning in 2002, the report has focused on “homeland security,” 

which expands the previous definition to include border enforcement activities of the Immigration and Naturalization Service and 

the Customs Service but narrows it to exclude overseas activities. 

The 2002 report included data for 2001 that had been adjusted to 

reflect the new definition.
4 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

Figure 1.

Funding for the Department of Homeland Security and for

Governmentwide Homeland Security, 2005

Source: Congressional Budget Office.

Note: FBI = Federal Bureau of Investigation.

The Department of Homeland Security

The Department of Homeland Security was created in 

November 2002 to bring together in one agency activities 

that had previously been spread throughout the federal 

government. Agencies that are now part of DHS include 

the Coast Guard, the Federal Emergency Management 

Agency (FEMA), the Secret Service, the Transportation 

Security Administration, the Bureau of Customs and 

Border Protection, and the Bureau of Immigration and 

Customs Enforcement. Gross budget authority for the 

department (excluding income from fees and other offsetting receipts) totals nearly $48 billion for 2005, according 

to CBO’s estimates. For 2006, the Administration has requested just over $40 billion in gross budget authority, a 

decrease of about 15 percent. However, the 2005 funding 

included $6.5 billion in supplemental disaster-relief 

funds and $2.5 billion in advance appropriations for 

Project Bioshield, which are not included in the 2006 

budget; taken together with the proposed increase in 

airline-passenger fees, they effectively account for the 

reduction.

Only about $28 billion of DHS’s 2005 budget is directed 

toward purposes that meet the executive branch’s definition of homeland security (see Figure 1). Those activities 

include, among other things, border and coastal security, 

immigration enforcement, and grants to first responders. 

The remaining $20 billion finances non-homeland-security functions that have been transferred to DHS along 

with the homeland security activities performed by their 

original agencies. The Coast Guard, for example, carries 

out both homeland security activities (such as coastal 
ECONOMIC AND BUDGET ISSUE BRIEF

FEDERAL FUNDING FOR HOMELAND SECURITY: AN UPDATE 5

defense and port security) and non-homeland-security 

activities (such as marine safety and navigation support). 

Other examples of non-homeland-security duties that 

DHS discharges are disaster relief and immigration 

services previously performed by the Immigration and 

Naturalization Service.

Homeland Security Activities of Other 

Federal Agencies

Although many homeland security activities have been 

consolidated under the mantle of DHS, other federal 

agencies also continue to carry out such activities. On the 

basis of data from OMB, CBO estimates that those agencies have been allocated a total of about $21 billion in 

gross budget authority for 2005. Of that amount, activities within the Department of Defense (such as security 

at military installations, as well as research and development of antiterrorism technologies) account for nearly $9 

billion (see Table 2). Homeland security activities of the 

Departments of Health and Human Services and Justice 

account for another $4 billion and $3 billion, respectively. Most of the HHS funds support the Public Health 

and Social Services Emergency Fund and research at the 

National Institute of Allergy and Infectious Diseases. The 

Department of Justice’s homeland security funding includes a portion of the FBI’s budget, as well as support 

for other law-enforcement activities undertaken to detect 

and apprehend terrorists.

Trends in Homeland Security Funding

Funding for homeland security activities has risen substantially since 2001 and would grow slightly under the 

President’s budget proposal for 2006. Gross budget authority in 2001 for those purposes, excluding supplemental appropriations enacted immediately after September 

11, totaled about $17 billion. Adding the supplemental 

appropriations raises that figure by almost $4 billion, 

bringing total funding for 2001 to $21 billion. That 

amount was increased to about $33 billion in 2002 (including $12 billion in supplemental appropriations), to 

$43 billion in 2003 (including about $6 billion in supplemental appropriations), to $42 billion in 2004, and to 

an estimated $49 billion for 2005.

In dollar terms, activities within the Department of 

Homeland Security have received the largest portion of 

funding increases in the past several years. Before the department was established, its component agencies received $10.7 billion in gross budget authority for homeland security activities in 2001, according to CBO’s 

estimates; almost $2 billion of that amount was provided 

in supplemental appropriations enacted after September 

11. For 2005, CBO estimates, DHS received gross appropriations of about $28 billion for homeland security activities—more than two and one-half times the amount 

provided in 2001. Funding for the Transportation Security Administration accounts for about $5 billion of the 

increase.8

 Of the remainder, $3 billion is for grants to 

state and local first responders, $4 billion funds increases 

for border security activities, and nearly $3 billion is allocated to biodefense research.

Funding for homeland security efforts within the Departments of Defense and Justice has also increased since September 2001. Homeland-security-related appropriations 

for DoD rose from about $5 billion in 2001 (including 

over $1 billion in supplemental funding) to nearly $9 billion in 2005. Most of the additional funds have been 

used to strengthen security at domestic military installations. Homeland security funding for the Department of 

Justice rose from about $1 billion in 2001 to nearly $3 

billion in 2005, with much of that increase going to pay 

for domestic counterterrorism activities of the FBI.

The largest percentage increase in homeland security 

funding since September 11 has been for activities within 

the Department of Health and Human Services: those activities claimed about $300 million of HHS’s budget in 

2001 and over $4 billion in 2005.

8. TSA was not officially created until fiscal year 2002, but $1.6 billion in unobligated funds—originally appropriated soon after the 

terrorist attacks in 2001—was transferred to the new agency to 

help pay its start-up costs. If that amount is excluded, TSA has 

added about $6 billion to DHS’s budget.
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ECONOMIC AND BUDGET ISSUE BRIEF

Table 2.

Funding for Homeland Security, by Agency

(Gross budget authority in billions of dollars)

Sources: Congressional Budget Office; Office of Management and Budget.

Note: Components may not sum to totals because of rounding. All years referred to are fiscal years.

a. Figures for 2001 include $3.6 billion in supplemental spending enacted immediately after September 11, 2001.

b. The Department of Homeland Security did not exist until fiscal year 2003. Figures for 2001 and 2002 represent spending incurred by the 

agencies that eventually made up the new department.

c. Excludes offsetting collections and receipts, which are recorded as negative budget authority. (For 2004, those receipts and collections 

totaled about $5 billion. For 2005, according to CBO’s estimates, they will total about $5.3 billion.)

The President's Budget Request for 

2006

For 2006, the President has requested $49.7 billion for 

homeland security activities, an increase of about $0.6 

billion (1.2 percent) over the 2005 level.

Under the President’s proposals, the Department of 

Homeland Security would receive nearly $500 million 

less for homeland security activities in 2006 despite 

increases in funding for a number of functions within the 

department. The decrease is primarily due to the fact that 

over $2.5 billion was appropriated in advance for 2005 

for Project Bioshield (a project to develop and procure 

tools to address the public-health consequences of terrorism), with no more funding to follow until another advance appropriation of nearly $2.2 billion in 2009.

2001a 2002 2003 2004

Estimated

2005

Requested

2006

Department of Homeland Securityb

Border and Transportation Security

Border and immigration enforcement 5.5 8.5 8.0 8.0 8.7 9.7

TSA and air marshals 1.6 3.7 5.9 5.3 6.1 6.3

Subtotal (BTS) 7.1 12.2 13.9 13.2 14.8 15.9

Emergency preparedness and response 0.1 1.3 0.2 1.0 2.6 0.1

State and local grant programs 0 0.2 3.5 3.3 3.1 3.4

Coast Guard 2.5 2.6 3.6 3.3 3.7 3.9

Science and technology 0 0.2 0.5 0.8 1.0 1.3

Other 0.9 1.3 1.4 2.2 2.3 2.5

Subtotal (DHS) 10.7 17.7 23.1 23.8 27.6 27.1

Department of Defense 5.4 5.2 8.4 7.0 8.6 9.5

Department of Energy 1.0 1.2 1.4 1.4 1.6 1.7

Department of Justice 1.0 2.1 2.3 2.2 2.9 3.1

Department of Transportation 0.4 1.2 0.4 0.3 0.2 0.2

Department of Health and Human Services 0.3 1.9 4.1 4.1 4.3 4.4

National Science Foundation 0.2 0.3 0.3 0.3 0.3 0.3

Department of Agriculture 0.2 0.6 0.4 0.4 0.6 0.7

Postal Service 0 0.6 0 0 0.5 0

Other Agencies 1.5 2.3 1.9 2.2 2.5 2.7

Subtotal (All other agencies) 10.0 15.3 19.4 17.9 21.5 22.6

Gross Budget Authority for HLSc 20.7 33.0 42.5 41.7 49.1 49.7
ECONOMIC AND BUDGET ISSUE BRIEF

FEDERAL FUNDING FOR HOMELAND SECURITY: AN UPDATE 7

The Directorate of Border and Transportation Security 

would receive the largest increase in funding for homeland security activities within the department for 2006. 

Its resources would grow by more than $1 billion, to 

nearly $16 billion. Those funds would be used to augment salaries and expenses at TSA, CBP, and ICE, as well 

as to create the new Office of Screening Coordination 

and Operations. The increase would be financed by raising air-passenger fees, which would generate an additional $1.7 billion. When added to another proposed 

$200 million increase in fees for issuing credentials to airline personnel and other collections, those added fees 

would result in an increase of over $1.9 billion in collections for BTS, which would be available for spending. 

That increment would be partially offset by a reduction 

of about $800 million in funds appropriated to the directorate. Elsewhere in the department, the Coast Guard 

would receive over $200 million more than it was allocated in 2005, roughly split between operating expenses 

and acquisitions accounts and offset by a small anticipated reduction in retirement pay.

State and local grant programs of the Department of 

Homeland Security that were categorized as homeland 

security spending in 2005 would be cut by nearly $200 

million. The President has proposed reclassifying firefighter-assistance grants as homeland security spending, 

thus adding $500 million to that category in 2006, for a 

net increase of $300 million in the President’s budget.

Homeland security funding for other departments would 

rise under the President’s proposed budget. Nearly $1 billion more would go to the Department of Defense, primarily to augment procurement programs and to support 

operations and maintenance activities. Smaller increases 

would be distributed among various other agencies. 

Those increases would be partially offset by a decrease 

for the Postal Service; after receiving $503 million of 

homeland-security-related funding in 2005, it would receive none in 2006. (That appropriation in 2005 was to 

address the dangers of hazardous materials in the mail.) 

This issue brief was prepared by Mike Waters, with 

contributions from Matthew Schmit and Gerard

Trimarco. It and other CBO publications are available 

at the agency’s Web site (www.cbo.gov).