Executive Summary
As of late February 2026, the Department of Homeland Security (DHS) faces significant operational bifurcation due to a lapse in appropriations. Current research into the FY2026 budget cycle and legislative activity reveals a stark dichotomy in fiscal resilience across the Department. Components reliant on annual discretionary appropriations—specifically U.S. Customs and Border Protection (CBP), U.S. Immigration and Customs Enforcement (ICE), and the Transportation Security Administration (TSA)—face immediate fiscal constraints. While designated “essential” personnel in these components continue to operate to protect life and property, they do so without pay, creating high attrition risks. Conversely, U.S. Citizenship and Immigration Services (USCIS) and the Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund (DRF) demonstrate high resilience; USCIS is projected to sustain operations indefinitely through fee balances exceeding $2.5 billion, and the DRF utilizes “no-year” authority to maintain disaster response capabilities.
Operational disruptions are most acute in components lacking “protection of human life” exemptions or carryover balances. The Science and Technology Directorate (S&T) and the Cybersecurity and Infrastructure Security Agency (CISA) face immediate degradation of non-emergency capabilities, particularly where operations depend on contractor support funded by expiring appropriations. Stop-work orders for these contractors are largely immediate, halting critical R&D and IT modernization efforts. While legislative proposals like the Pay Our Homeland Defenders Act of 2026 (H.R. 5398) aim to mitigate workforce hardships, they do not address the broader lack of operating funds for contractual services and non-pay expenses.
Comparative Analysis of Funding Structures: Discretionary vs. Fee-Funded Accounts
The fiscal architecture of DHS creates distinct tiers of operational continuity during a lapse in appropriations. This structure is defined by the source of authority—Annual Discretionary Appropriations versus Fee-Funded and Multi-Year Accounts.
Annual Discretionary Appropriations
The majority of DHS enforcement and security components rely on the “Operations and Support” (O&S) account, which is funded through annual discretionary appropriations.
Dependent Components: CBP, ICE, the U.S. Coast Guard (USCG), TSA (salaries), CISA, and the Science and Technology Directorate (S&T).
Mechanism of Disruption: These accounts typically expire at the end of the fiscal year or upon the expiration of a Continuing Resolution (CR). For example, H.R. 1968 (Full-Year Continuing Appropriations and Extensions Act, 2025) extended funding availability only through specific dates in FY2025, after which new authority is required (H. R. 1968). Without a new enactment, the authority to incur new obligations ceases, forcing a shutdown of all non-excepted activities.
Fee-Funded and Multi-Year Accounts
A subset of DHS components operates using funds that do not expire at the end of the fiscal year (“no-year” funds) or are derived from user fees that remain available until expended.
USCIS: Primarily funded by the Immigration Examinations Fee Account (IEFA). Research indicates that approximately 96% of the USCIS budget authority is derived from mandatory appropriations and fee collections, which are not subject to annual congressional appropriations lapses (USCIS Statement of Financial Condition).
FEMA Disaster Relief Fund (DRF): This account is designated as “no-year” funding, meaning unobligated balances remain available until expended. This structure allows disaster response coordination to continue regardless of the broader DHS appropriations status (FEMA FY2026 CJ).
TSA Aviation Security Capital Fund: While TSA salaries are discretionary, specific capital improvements are funded through mandatory security fees (e.g., the September 11 Security Fee), allowing limited procurement activities to continue (DHS FY2026 Budget in Brief).
Operational Sustainment Timelines by Component
Operational sustainment varies significantly based on the availability of carryover balances—funds obligated in previous years that remain available—and the legal authority to collect and spend fees.
USCIS and FEMA: High-Resilience Models
U.S. Citizenship and Immigration Services (USCIS) USCIS possesses the highest level of fiscal resilience within DHS. The agency’s FY2024 Statement of Financial Condition reports an ending carryover balance of approximately $2.57 billion in the Immigration Examinations Fee Account. Furthermore, FY2025 projections estimated a carryover of $3.53 billion (USCIS Statement of Financial Condition).
- Sustainment Timeline: Indefinite. Because these funds are “available until expended” and revenue collection (application fees) continues during a shutdown, USCIS can sustain payroll and operations for months or years without new appropriations, provided fee revenue remains consistent.
FEMA Disaster Relief Fund (DRF) FEMA’s DRF operates on a no-year basis. The FY2026 budget request included $26.5 billion for the DRF to support major disasters (FEMA FY2026 CJ).
- Sustainment Timeline: Highly durable. While FEMA’s administrative “Operations and Support” account is discretionary and subject to lapse, the DRF itself remains solvent as long as balances exist. Operations related to disaster response (Stafford Act declarations) continue uninterrupted.
CBP, ICE, and TSA: The "Essential" but Unpaid Workforce
These components do not “sustain” operations in a fiscal sense; rather, they continue operations legally under the Antideficiency Act’s exception for the “protection of human life and property.”
Customs and Border Protection (CBP) & Immigration and Customs Enforcement (ICE): Approximately 90% of DHS employees, primarily in these components, are designated as exempt/excepted and must work without pay (Voice of America, Jan 2018). While CBP collects user fees (e.g., COBRA, Land Border Inspection Fees), these are often statutorily restricted to specific customs functions and cannot legally replace the lapsed “Operations and Support” appropriations required for Border Patrol Agent salaries (CBP FY2026 CJ).
- Sustainment Timeline: Operations continue immediately but are operationally fragile. There is no fiscal “runway”; staff are unpaid immediately upon the first missed pay period. H.R. 5398, introduced in late 2025, attempts to appropriate funds specifically for these salaries during a lapse, but until enacted, these agencies rely on employee compliance rather than available funds (H. R. 5398).
Transportation Security Administration (TSA): TSA screeners are similarly essential. While the Aviation Security Capital Fund is mandatory, it funds infrastructure, not screeners.
- Sustainment Timeline: Operations continue, but history (2019 shutdown) indicates rising absenteeism due to financial hardship after the first missed paycheck (USA Today, Feb 2026).
Immediate Operational Disruptions: Limited Carryover and No-Year Flexibility
Certain DHS programs face immediate suspension because they lack both the fee-funded independence of USCIS and the “imminent threat” exemption of CBP/ICE.
Science and Technology Directorate (S&T): S&T relies heavily on annual research and development (R&D) appropriations. While some multi-year funds exist for specific projects (e.g., Arctic Domain Awareness Center carryover of $4.3M), the bulk of administrative and new grant-making authority resides in expiring accounts (DHS FY2024 Award Notice). Without a “protection of life” designation for basic research, university grants and laboratory operations halt immediately.
Federal Law Enforcement Training Centers (FLETC): Training operations are generally suspended unless deemed essential for immediate deployment. As a support component funded by annual appropriations, FLETC has limited no-year flexibility to bridge a gap.
Impact of Recent Rescissions: Legislative actions in the Full-Year Continuing Appropriations and Extensions Act, 2025 (H.R. 1968) actively rescinded unobligated balances from DHS accounts, including $133 million from the Nonrecurring Expenses Fund (H. R. 1968). This legislative tightening reduces the department’s ability to use prior-year carryover to mitigate the impacts of the current lapse, forcing earlier shutdowns of administrative functions compared to previous years.
Contractor Dependency and Stop-Work Order Impact
The reliance on contractor support funded through expiring appropriations constitutes a critical vulnerability for DHS, particularly in the Management Directorate, S&T, and CISA.
Expiring Appropriations and Stop-Work Orders: Federal acquisition regulations require that contracts funded by expiring annual appropriations (e.g., O&S funds) must stop if the funding lapses, unless the contract was fully funded upfront (fixed-price) and requires no government supervision. For “Labor-Hour” or “Time-and-Materials” contracts—common in IT support and consulting—the stop-work orders are often immediate.
- Affected Areas: CISA’s cybersecurity analysis and S&T’s research support are heavily contractor-dependent. Reports indicate that during shutdowns, training for reserve forces and intelligence operations (often contractor-supported) stops immediately (Voice of America, April 2021).
Mission Degradation: While “essential” federal employees remain, the contractors who maintain their IT networks, conduct background investigations, or support R&D testing are frequently furloughed. The S&T Directorate, which utilizes university centers and private contractors for R&D, faces immediate stagnation of work. For example, oversight of the Arctic Domain Awareness Center and similar programs is restricted pending DHS receipt and approval of workplans—approvals that cannot be issued by furloughed staff (DHS FY2024 Award Notice).
Conclusion: Structural Vulnerabilities and Legislative Mitigations
The FY2026 shutdown scenario highlights a structural fragility in DHS: while the department’s “forward-facing” missions (border security, disaster response) continue legally, they are fiscally hollowed out. USCIS stands as the only component largely immune to appropriations lapses due to its fee-based model. Conversely, the “essential” workforce at CBP, ICE, and TSA bears the brunt of the shutdown, working without pay. Legislative measures like the Pay Our Homeland Defenders Act of 2026 (H.R. 5398) are designed to authorize continuing appropriations for salaries, mitigating the risk of mass attrition (H. R. 5398). However, such measures address only personnel compensation; they do not provide operating funds for the contractors, equipment, and research vital to the Department’s long-term mission, leaving components like S&T and CISA vulnerable to immediate and degrading capability losses.