State Department and USAID FY 2025 Budget Outlook

The Office of Management and Budget (OMB) released its fiscal year (FY) 2025 budget request last month and the Department of State (DoS) and the U.S. Agency for International Development (USAID) together rank among the top five highest-funded civilian departments.

Total Discretionary Funding and Priorities

The FY 2025 International Affairs budget request continues to place the State Department and USAID on a modest growth path at the topline discretionary level, requesting $58.8B in aggregate discretionary funding, a 1.2% increase above the estimated FY 2024 Continuing Resolution (CR) level of $58.1B as stated in the budget release. Now that Congress has subsequently passed final FY 2024 appropriations of $58.3B for DoS the FY 2025 request would be a more modest $455M (+0.8%) increase from FY 2024.

Funding highlights include:

• Contains $10.1B for Diplomatic Programs, a $571M increase from FY 2024. The total includes $6.2B to support daily operations at U.S. embassies, consulates and diplomatic missions around the world and $3.9B for Worldwide Security Protection.
• Provides $9.8B for global health programs, a $733M decrease from the FY 2024 estimated level. This includes more than $900M for global health security, of which $250M is for the Pandemic Fund.
• Allots $999M to counter Russian and Chinese influence by building the resilience of allies and partners, advancing democratic reforms, countering disinformation and bolstering energy and cyber security.
• Allocates $500M to expand U.S. global cyber and digital development initiatives to promote open and secure technological ecosystems and help secure U.S. competitiveness.
• Supplies $257M to strengthen U.S. East Asia and Pacific regional frameworks to enhance cyber and digital connectivity to build resilience to transnational threats and promote economic prosperity.

Information Technology Budgets

Details of State’s and USAID’s IT budget are published on OMB’s IT Dashboard, giving insight into their planned IT investments, initiatives and priorities. The State Department’s FY 2025 IT budget request is over $3.5B, which would be a $19M (-0.5%) decrease from the FY 2024 annualized CR level but $95M (2.7%) above the FY 2023 final level. USAID’s FY 2025 IT budget request comes in at $383M, placing it $5M (-1.4%) below the FY 2024 annualized CR level and almost $7M (-1.7%) less than the final FY 2023 level.  

Both State and USAID, like other federal agencies, allocate a portion of their total IT budgets for new development spending, known as Development, Modernization and Enhancement (DME). For FY 2025 State allocates $476M for DME, which is $276M below FY 2024 and $341M below FY 2023, decreases of 37% and 42% respectively. For comparison, USAID proposes a 20% decrease in DME for FY 2025 to fall to $99M. Taken together, State and USAID represent $575M in combined DME funding, a combined $301M (-34%). (See table below.)

Noteworthy IT Programs

The details of the State Department’s and USAID’s IT investment priorities and initiatives provide some perspective on where they are planning to invest in FY 2025. These are the six largest IT initiatives across the State Department for FY 2025, including observations about budget growth and their proportion of new development spending.

• Bureau IT Support: This set of investments encompass centrally provided shared IT support services such as desktop services; telecomm, wireless & data services; peripherals; software; and any other IT infrastructure costs incurred by the various DoS bureaus. It receives an aggregate $648M for FY 2025, which is 2.2% below FY 2024 and is made up of 20% DME. Historically, Bureau IT Support had been listed as a single large initiative, but beginning with the FY 2020 budget Bureau IT Support was broken out by 33 bureaus, offices, etc. offering the same IT infrastructure support to each. It is re-aggregated here to show the comparative size and influence of these efforts on the State Department’s IT landscape.
• Consular Enterprise Infrastructure & Operations: This program maintains Consular Affairs (CA) IT infrastructure and provides technical services to support CA’s systems across 300+ locations world-wide, supporting over 45,000 servers and 4 petabytes of data. The program provides infrastructure improvements and upgrades to test environments. Funding of $498M for FY 2025 would be $41M (-8%) less than FY 2024 and consists of 16% DME funding.
• Enterprise Network and Bandwidth Services: ENBS designs, operates, maintains, secures, and modernizes the DoS IT network infrastructure and systems, enabling collaboration and information sharing across DoS and its foreign affairs partners. It receives $330M for FY 2025, an increase of $12M (+4%). This initiative is 100% Operations and Maintenance (O&M) funding.
• Deployment, Maintenance, and Refresh Services: Ensures domestic and overseas IT equipment is routinely updated, relocated, and/or replaced. Service includes procuring, deploying, and maintaining upgraded workstation/software packages, server, telecommunications, radio, and video collaboration. This initiative receives $268M for FY 2025, a $26M (-9%) decrease from FY 2024 and is categorized entirely as O&M.
• Information Technology Acquisitions: This initiative applies a comprehensive approach to the creation, curation and lifecycle DOS IT agreements. FY 2025 funding of $156M is a $38M (-19%) drop from FY 2024. This investment is 100% DME funding.
• Consular Systems Modernization: This program is intended to achieve mission improvements to critical consular business functions, which will allow for the expansion of digital services, CA's core business support systems, and the streamlining of essential support systems. The program receives $144M for FY 2025, which is $74M (+107%) above FY 2024 and is 52% DME funding.

Collectively, these largest six budget line items account for nearly $1.4B (39%) of State’s total requested IT budget for FY 2025. The kinds of work covered by these programs indicate that infrastructure and operational requirements continue to dominate State Department IT priorities, which is consistent with federal government-wide trends.

However, there are pockets of new development, modernization and associated budget growth within some of these top programs, and other smaller programs that do not make this list, that indicate ongoing IT modernization efforts to support essential mission objectives. State and USAID IT initiatives will continue to rely upon contracted services and support, as well as innovative commercial products, to achieve their IT modernization objectives.

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For more analysis on the FY 2025 Federal Budget check out our report, FY 2025 Federal Budget Request: Priorities and Opportunities.