Politics
White House wants to move TMF to ‘pass the hat’ funding model
The Trump administration is zeroing out the Technology Modernization Fund for next year. But that doesn’t mean its coffers will be empty.
As part of newly released fiscal 2026 budget details, the White House is proposing a new funding model for the TMF.
The General Services Administration, which oversees the TMF, wants to make it a revolving or working capital fund of sorts.
The legislative proposal would let “GSA, with the approval of OMB, to collect funding from other agencies and bring that funding into the TMF,” GSA wrote in its budget justification document. “This would allow agencies to transfer resources to the TMF using funds that are otherwise no longer available to them for obligation. This provision is essential to providing the TMF with the necessary funds to help the federal government address critical technology challenges by modernizing high-priority systems, improving AI adoption and supporting cross-government collaboration and scalable services.”
GSA wants to be able to collect up to $100 million a year in otherwise expired funding. The TMF funding would be no-year money as well.
“To further strengthen the TMF’s ability to help agencies kickstart or accelerate their urgent modernization efforts, GSA and OMB are committed to exploring alternative funding mechanisms,” GSA wrote. “This proposal offers a dual benefit: It would increase the amount of funding available in the TMF to make continued investments while simultaneously alleviating the burden on the Financial Services and General Government Appropriations Subcommittee. By responsibly managing existing resources, the TMF is positioned to deliver lasting value to the American people and enhance the efficiency and effectiveness of government services.”
A source familiar with the TMF process said this “pass the hat” model isn’t necessarily a new idea. The TMF leadership discussed this previously as getting appropriations through the normal process proved difficult.
The source said the new approach may work better than the traditional process, depending on how much funding actually flows back into the fund.
Two other funds use this approach
GSA says this provision is modeled after two sections of the 2024 Further Consolidated Appropriations Act. One of the sections lets GSA collect money from credit card rebates to put toward the Office of Governmentwide Policy efforts to manage the CXO councils and “governmentwide and other multiagency financial, information technology, procurement and other management innovations, initiatives and activities, including improving coordination and reducing duplication.”
The second section collects funding to support activities of the Federal Citizen Services Fund at GSA.
Congress approved the authority for OGP up to $32 million and the FCSF for up to $29 million.
“It sounds pretty good as first glance. It’s been a challenge to get repayment, and funding IT modernization with remaining funds, credit card rebates and other change you can find between the couch cushions is good and makes a lot of sense,” said Franklin Square Group’s Kevin Cummins, the former staff member lead in the Senate on the MGT Act, which authorized and advocated for funding the TMF. “I would like to see congressional funding too. This shouldn’t replace that. But having extra flexibility to get money into the fund would be a good thing.”
The TMF long has struggled to obtain funding from Congress. Outside of the $1 billion it received from the American Rescue Plan Act, lawmaker have allocated limited to no support.
Last year, for example, Congress rescinded $113 million from the TMF and zeroed out any new funding.
The Biden administration requested $200 million for the TMF in its 2024 budget request. The TMF board received $50 million in 2023 from Congress. For fiscal 2025, the White House asked for $75 million for the TMF.
In its 2026 proposal, GSA recognized the TMF’s long-standing funding challenges.
“Without sustained funding, the TMF will continue shepherding investments with available resources, but will not be able to tackle large-scale investments needed to advance policy priorities nor meet the significant demand shown for the fund,” GSA wrote. “The TMF is committed to long-term financial sustainability while meeting the growing demand from agencies tackling critical technology infrastructure investments. To ensure the fund’s continued viability, we anticipate full repayment for future investments, with rare exceptions subject to approval by the GSA administrator and OMB director.”
The TMF Board updated the repayment requirements in April, now prioritizing full repayment for new investments. The board says this will better ensure the long-term sustainability of the TMF and allow for continued investment in modernization projects across the government.
“Sustained investment in the TMF represents a critical strategy for transforming government IT management, ultimately saving time, budget, and reducing cybersecurity risks,” GSA stated.
Cummins said the full repayment model hasn’t worked as intended and expects that it will continue to be a problem for agencies.
“Agencies have had a hard time finding real dollars to repay funding. If the TMF gets bogged down by requiring 100% repayment, it may not get a lot of use going forward,” he said.
FCSF, ITOR to see increases
There is support to update the underlying legislation that created the TMF, the Modernizing Government Technology Act of 2017. Rep. Nancy Mace (R-S.C.), chairwoman of the Oversight and Reform Subcommittee on Cybersecurity, IT and Government Innovation, reintroduced the Modernizing Government Technology (MGT) Reform Act in April. The bill would reauthorize and reform the TMF and its governing board as well as improve its administration to maintain focus on getting rid of legacy IT systems.
The TMF lost an ardent supporter in former Rep. Gerry Connolly (D-Va.), who passed away in May.
For 2025, GSA says it expects the TMF to have more than $231.8 million available to loan out.
Source: GSA budget justification for 2026.
In addition to the TMF, GSA is requesting $70 million for the Federal Citizen Services Fund for next year. And like the proposal for the TMF, Congress granted the fund the ability to collect expired funding in 2023. GSA says it would collect another $16 million from agencies.
“The fiscal 2026 President’s budget request builds on the 2023 vision for the fund that included both agency contributions and direct appropriations. Some shared services will remain fully funded by appropriations, while other mature and broadly used shared services will receive funding from agency contributions,” GSA wrote. “As agency contributions are normalized and become a standard, predictable way of doing business, GSA will be able to transition more programs to this funding model, lessening the dependence on constrained annual appropriations for popular programs that must scale to meet demand.”
A third pot of money to support IT modernization, the IT Oversight and Reform (ITOR) fund at OMB, would receive $19.6 million for 2026. This is up from the $8 million it received this year.
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