THE FEDERAL SCIENCE & TECHNOLOGY BUDGET REQUEST FY 1998 PANEL ON FS&T ANALYSES

Transcription

1 THE FEDERAL SCIENCE & TECHNOLOGY BUDGET REQUEST FY 1998 PANEL ON FS&T ANALYSES NATIONAL ACADEMY OF SCIENCES WASHINGTON, DC 1997

2 The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. This project was internally funded. Copyright 1997 by the National Academy of Sciences. All rights reserved. Printed in the United States of America.

3 March 24, 1997 Dear Colleague: Enclosed is a copy of The Federal Science & Technology Budget Request, FY 1998.It focuses on the President s federal science and technology (FS&T) budget for fiscal year 1998 and is the second in a series of reports to be issued on a regular basis by the National Academy of Sciences Panel on FS&T Analyses. As was indicated in the Panel s earlier report, an NAS committee on which we served proposed the FS&T budget as a more precise measure of the federal investment in new knowledge and new technologies, because it excludes the funding traditionally counted in the federal research and development (R&D) budget for activities such as production engineering, testing and evaluation, and upgrading of large weapons and related systems. These latter activities are unquestionably important, but if the nation wishes to understand trends in public investments in creating new scientific knowledge and innovative technologies, we believe that the FS&T budget is closer to the mark and that tracking trends in it is more useful. The main findings of the report, expressed in constant or inflation-adjusted dollars, are as follows: The FS&T budget request for FY 1998 is approximately $45.3 billion, a 2.0 percent increase over the 1997 appropriation for FS&T and the first increase since at least Currently, only two S&T agencies and departments the National Institutes of Health (NIH) and the National Science Foundation (NSF) have more FS&T funding than they had in FY If the President s FS&T budget request for FY 1998 is approved by Congress, three more major agencies (the Departments of Energy (DOE), Commerce, and Transportation) and several smaller agencies would join NIH and NSF in having budgets larger than they had in FY 1994 in real terms. Despite growth in the FS&T budgets of many agencies, the overall FS&T budget request is 3.4 percent less in 1998 than the approved budget in Although the increase in FS&T budget authority from FY 1997 to FY 1998 is certainly welcome, it is due to a change in the way DOE would budget for the construction of new FS&T facilities. Normally, DOE budgets for facility construction on an incremental or year-to-year basis. The FY 1998 budget request includes not only the incremental amount needed to begin construction of FS&T facilities in 1998 but also enough additional budget authority (more than $880 million) to finish the facilities in the years beyond For example, the budget request includes $198 million to begin building the National Ignition Facility (NIF), the amount it would normally ask for, and an additional $679 million needed to complete NIF in the years If the FS&T construction funding needed in 1998 is included, but the additional out-year funding is excluded, the total FS&T

4 budget would not grow at all in FY 1998 and would be 5.3 percent less than it was in Some fields of research receive percent of their federal support from agencies whose FS&T budgets have been declining in recent years. Because information on how federal research funds are allocated among fields lags budgeting by several years, the latest data are for As more recent data become available, the panel will track the impact of FS&T budget changes on fields and types of research performers to see that there is not inadvertent underinvestment in areas important from a national point of view (e.g., diminished support from computer sciences, electrical engineering, and materials sciences by the Department of Defense, fields for which it has been the single largest funder). We hope you find the FS&T budget data informative and useful in assessing what is happening to federal support of the research enterprise, which has been an important factor in the nation s preeminence in science and technology. The next report in this series will analyze the final FS&T appropriations for FY 1998 after they are enacted in the fall of We would be happy to hear your views on the FS&T budget and its utility, and we invite your comments. Frank Press, Chair H. Guyford Stever Panel on FS&T Analyses

5 Preface 1 The federal science and technology (FS&T) budget is a measure of federal investment in the nation s future, along with investments in education, environmental protection, and other sources of long-term growth in productivity and improvements in our quality of life. Research aimed at new knowledge and novel technologies is a major contributor to economic growth, national security, health, quality of life, and human knowledge. In the 50 years since World War II, there has been bipartisan recognition of the federal role in support of S&T in the nation s science and engineering institutions (universities, federal laboratories, and other research organizations). In 1995, a joint committee of the National Academies of Sciences and Engineering and the Institute of Medicine issued a report, Allocating Federal Funds for Science and Technology (NAS, 1995), that recommended ways to ensure that the United States remains the world leader in research and development (R&D). Among other recommendations, the committee suggested that policy makers monitor trends in that portion of the federal R&D budget that is devoted each year to expanding fundamental knowledge and creating new technologies. The report accordingly proposed adoption of a new measure of the federal government s investment in new knowledge and technologies, which it called the federal science and technology, or FS&T, budget. The FS&T budget, a subset of the federal budget for research and development (R&D), excludes the substantial and important part of federal R&D devoted to the production engineering, testing and evaluation, and upgrading of large weapons and related systems. It includes, however, the large amount (more than $7 billion a year) that the Department of Defense (DOD) invests in its S&T base, which is aimed at the development of new knowledge and technologies for future systems. It recognizes that DOD s S&T base provides a substantial portion of all federal support for research and generic technology development in several key areas, such as computer science, electrical engineering, and materials. The FS&T budget also recognizes the large role in FS&T funding played by other mission agencies, as well as by the two agencies most commonly equated with support of fundamental science and technology in the United States the National Institutes of Health and the National Science Foundation. In 1996, the National Academy of Sciences established the Panel on FS&T Analyses, composed of Frank Press and H. Guyford Stever (chair and member, respectively, of the committee that prepared the 1995 report), to issue regular reports on trends in the FS&T budget. The Panel s first report (NAS, 1997) analyzed the FS&T budget enacted in FY 1997 and FS&T funding trends since The current report analyzes the status of FS&T in the President s recent budget request for FY It will be followed by a report on the final appropriations for FS&T when they are enacted later in the year. The methodology used to estimate the FS&T budget is explained in the appendix of this report. The appendix also compares FS&T with R&D as a measure of federal support of research and technology development. The Panel would like to thank its staff, especially Michael McGeary, who drafted this report, as well as Norman Metzger and Cameron H. Fletcher. It also thanks others who assisted: Jack Fellows, Michelle Donovan, and Robert L. Civiak, Office of Management and Budget; Robert Tuohy and Stanley Trice, Office of the Director of Defense Research and Engineering, Department of Defense; Michael Saltzman, Department of Energy; Mary Anne Fitzgerald, 1 The information presented here was also included in the Panel s report on The Federal Science & Technology Budget, FY 1997.

6 National Aeronautics and Space Administration; Ronald L. Meeks, Science Resources Studies, National Science Foundation; Kei Koizumi, American Association for the Advancement of Science; Christopher T. Hill, Institute of Public Policy, George Mason University; Ronald M. Konkel, Consultant, Bethesda, MD; Porter E. Coggeshall, National Research Council; and Robert M. Cook-Deegan, Institute of Medicine. The Panel also thanks David J. Baskin for preparing the report to be posted on the Internet. Copies of the report can be obtained from and inquiries can be directed to (202) (voice), (202) (fax), or, preferably, (Internet). This report, the FY 1997 report, and the 1995 report, Allocating Federal Funds for Science and Technology,are available via the Internet at

7 Summary The President s federal science and technology (FS&T) budget request for FY 1998 totals $45.3 billion, 2.0 percent more than the amounts appropriated in FY 1997 after inflation (Figure 2 1). It should be noted that this 2 percent is equal to the boost in the budget caused by a change in the way the government proposes to budget for new facilities at the Department of Energy (DOE). If the budget is enacted, all the major S&T agencies 3 except the Departments of Agriculture (USDA) and Defense (DOD) will receive real increases over FY 1997, and the number of agencies with FS&T budgets larger than in 1994 will jump from two in 1997 National Institutes of Health (NIH) and National Science Foundation (NSF) to five in 1998 NIH, NSF, Department of Energy, Department of Commerce, and Department of Transportation. 50 Billions of 1998 Dollars Fiscal Year FIGURE 1. FS&T budget, FY 1994 FY 1998 (constant dollars). The solid line represents total FS&T funding. The dotted line shows FS&T funding excluding the out-year funding of DOE FS&T facilities. SOURCE: Table A.1. The FS&T budget request for FY 1998 represents the first real increase since The proposed increase is possible in part because the President is asking for a 2.2 percent real increase in total discretionary budget authority, which includes FS&T. If approved, this increase in discretionary authority would be the first since budget balancing began in earnest in If the 2 All budget numbers and percentages are expressed in constant dollars in the report, unless otherwise noted, to account for the effects of inflation. The nominal or current-dollar equivalents are provided in the top panel of Table A.1. In the lower panel of Table A.1 they have been converted to 1998 dollars using the GDP deflators in Table 10.1 of the historical statistics volume of the Budget of the United States Government, Fiscal Year 1998 (OMB, 1997). 3 In this report, the major S&T agencies are the 10 departments and agencies with an annual FS&T budget of more than $500 million (see Table A.1).

8 administration s economic and budget forecasts are wrong, however, and budget deficits turn out to be closer to those forecast by the more cautious Congressional Budget Office, a trigger mechanism in the President s budget could result in across-the-board cuts in discretionary programs, including FS&T, in 2001 and The net increase of 2 percent in the FY 1998 FS&T budget is also due to a change in the way the government proposes to budget for facility construction at the Department of Energy (DOE). DOE currently funds facilities incrementally on a year-to-year basis. The FY 1998 request proposes a budget for all facilities on a full up-front basis beginning in FY In the case of FS&T facilities, this change adds $883 million to what DOE would normally have budgeted in FY 1998 for facility construction. This extra funding would pay for construction of FS&T facilities in the out-years (i.e., FY 1999 and beyond). If the out-year construction funding for new DOE facilities is excluded from the comparison and only the amount needed in FY 1998 is included, the total FS&T budget remains at the same level as it was in 1996 and 1997 and is 5.3 percent less than it was in If the full proposed increase of 2 percent from FY to FY 1998 is enacted (including the out-year funding for DOE facilities), the FS&T budget will be 3.4 percent less than it was in FY 1994, and 8.3 percent less if NIH and NSF are not included. FS&T budgets at some agencies (e.g., DOD, the National Aeronautics and Space Administration, USDA, and a number of agencies with small FS&T programs) have experienced substantial declines since The differential growth of FS&T budgets across agencies will no doubt alter the distribution of federal support among research fields and performers, 4 probably with unintended effects. Agencies with shrinking FS&T budgets provide the majority of funding for some fields of science and engineering research, which other government agencies and the private sector rely on. DOD, for example, has provided a large share of federal funding for computer sciences research, and cutbacks in that support could hinder the work of other agencies, including computer-intensive biological research supported by NIH and NSF, such as genome research and structural analysis for drug design, and they could slow fundamental progress in the computation and information networking that undergird more and more U.S. economic activity (NAS, 1995:29-30). 4 Information on the amounts allocated in federal research funding among science and engineering fields and performing institutions is available only through 1994 (NSF, 1996b), but should be tracked in the future as data become available (1995 survey results are due to be released later in the spring of 1997 by the National Science Foundation). 2

9 Detailed Analysis Changes in Agency FS&T Budgets from FY 1997 to FY 1998 The President s budget would give some agencies the Departments of Energy, Commerce (DOC), and Transportation (DOT), and the Environmental Protection Agency (EPA) substantial real increases (i.e., increases above inflation) in FS&T funding in percentage terms (Figure 2). Of these, only DOE s FS&T budget would increase significantly in absolute terms by slightly more than $1.0 billion in FY 1998 dollars (Table A.1). Most of the major FS&T agencies (those with FS&T budgets of $500 million or more) would receive increases of 1.5 percent or less. This includes NIH, which had experienced real annual increases of at least 4 percent in recent years. The proposed increases, which would total more than $1.5 billion, would be offset by cuts in FS&T budgets at DOD and USDA totaling $663 million, reducing the net increase in FS&T to $880 million in 1998 dollars. If the President s FY 1998 budget is approved, the increases will allow the agencies that receive them to undertake a variety of initiatives, which are highlighted in Promoting Research, Chapter 4 of the budget volume of the Budget of the United States Government, Fiscal Year 1998 (OMB, 1997). Some of the initiatives are described below. DOE. DOE s FS&T budget would increase by 18.5 percent, to $6.517 billion. As already noted, however, most of the proposed increase consists of a one-time adjustment to provide full funding for FS&T facility construction in advance rather than continue with incremental year-to-year funding. Most of the out-year funding ($679 million of $883 million) would go to complete the National Ignition Facility (NIF) in the Science-Based Stockpile Stewardship Program; NIF construction is scheduled to begin in 1998 and end in Excluding the out-year construction funding, DOE s FS&T budget would increase by 2.6 percent over 1997, to $5.634 billion. 5 Aside from the large increase to build NIF and some other facilities, and despite a 35 percent increase in the Accelerated Strategic Computing Initiative to $205 million, the Stockpile Stewardship Program would shrink by 2 percent to $1.4 billion. The civilian programs in high energy and nuclear physics, basic energy sciences, and biological and environmental research, designated as high-priority areas of basic research by the administration in the FY 1998 budget, would get $2.1 billion, 1 percent less than in The United States would increase its contribution to the Large Hadron Collider in Europe by 131 percent to $35 million. DOT. The administration is proposing to increase DOT s FS&T budget by 15 percent to $754 million. That includes $250 million for the Intelligent Transportation System initiative, 3.7 percent more than in EPA. EPA s FS&T budget would increase by 7.3 percent in the President s budget, to $555 million. Most of the increase would expand research on the health effects of particulate matter (up by 33.3 percent) and STAR, EPA s peer-reviewed extramural research program (up by 17.9 percent). 5 This budget would still include the $285 million increment in budget authority needed for facility construction in FY 1998, including $198 million to begin building NIF. 3

10 DOD -7.1% NIH 0.1% NASA 0.5% DOE 18.5% (DOE minus out-year facility funding) 2.4% NSF 1.2% F&ST Agency USDA DOC -6.3% 3.5% DOT 15.0% EPA 7.3% DOI 1.5% Others 4.2% Total FS&T (FS&T minus DOE out-year facility funding) 0.0% 2.0% Percent Real Change, FY FIGURE 2. Proposed constant-dollar changes (in percentages) in FS&T budgets by agency, FY 1997 FY Amounts for both DOE and Total FS&T are shown with and without DOE s proposed out-year facility funding. SOURCE: Table A.1. DOC. DOC s FS&T budget, which is mostly for the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration, would increase by 3.5 percent to $1.115 billion. The administration is requesting increases of 19 and 32 percent, respectively, for NIST s Advanced Technology Program (ATP) and the Manufacturing Extension Partnerships Program. The budget includes a plan to increase ATP 4

11 from $275 million in 1998 to $500 million in 2002 (in nominal dollars). The National Telecommunications and Information Administration would receive $36 million for grants to help develop the National Information Infrastructure in FY DOI. The Department of the Interior s FS&T budget, which has been cut the past 3 years, would increase by 1.5 percent to $605 million. NSF. The budget request includes $2.553 billion for FS&T at NSF, an increase of 1.2 percent. The funds would go to new initiatives, including a focused $58 million effort to understand the potential uses of information technologies and a program to support research on life in extreme environments, plus expanded investment in major research facilities and equipment. NASA. NASA s FS&T budget would increase by 0.5 percent to $9.603 billion. OMB projects an out-year funding trajectory for NASA that would be higher than the one forecast in recent years. The space station would get $2.121 billion, 3.8 percent less than in FY Several areas would receive relatively more emphasis: aeronautics would receive $456 million (6.5 percent more), Mission to Planet Earth would get $1.417 billion (1.4 percent more), and funding for space science would increase to $2.044 billion (1.1 percent more). Funding for development of a reusable launch vehicle (X-33) would increase 31.5 percent to $719 million. NIH. NIH s FS&T budget would increase by less than 0.1 percent to $ billion, still the largest FS&T budget among all agencies. According to the President s budget, NIH plans to increase research on AIDS, breast cancer and other health problems of women, disease prevention, spinal cord injury, developmental and reproductive biology, minority health initiatives, and NIH s part of the high performance computing initiative. USDA. Agricultural research would decline by 6.3 percent to $1.485 billion in FY Within that smaller total, however, the National Research Initiative, USDA s major peerreviewed competitive grants program, would increase by nearly 35 percent to $130 million. DOD. FS&T at DOD would shrink 7.1 percent ($563 million in 1998 dollars) to $7.392 billion, despite an increase in basic research (budget category 6.1) of 5.0 percent to $1.164 billion (Table A.2). The cuts would be made in applied research (6.2) and advanced technology development (6.3), which would decline by 4.5 percent and 12.4 percent respectively. Other Agencies. Some 16 other departments and agencies have relatively small FS&T budgets ranging from $243 million at the Department of Veterans Affairs to $1 million at the Marine Mammal Commission. The President s proposed budget would give them, as a group, an increase of 4.2 percent. There would be large percentage increases at the Agency for International Development (29.8), Tennessee Valley Authority (25.1), Department of Housing and Urban Development (11.8), and Department of Education (10.6), offset by stasis or decreases at the others. In addition, the FS&T budgets of bureaus other than NIH at the Department of Health and Human Services would increase by 27.1 percent to $932 million. 5

12 Changes in Agency FS&T Budgets from FY 1994 to FY 1998 In 1997, only two of the 10 major FS&T agencies NIH and NSF ended up with larger FS&T budgets in real terms than in 1994 (NAS, 1997). If the President s budget is adopted, three more major agencies DOC, DOT, and EPA and several of the smaller ones will have larger budgets in 1998 than in 1994 (Figure 3). However, the total 1998 FS&T budget would still be 3.4 percent less than it was in It would be 8.3 percent less if it did not include NIH and NSF. 6

13 DOD -18.9% NIH 8.8% NASA -6.4% DOE 2.0% (DOE minus out-year facility funding) -11.8% NSF 4.9% FS&T Agencies USDA DOC -12.6% 17.0% DOT 6.9% EPA -9.6% DOI -22.5% Others -18.2% Total FS&T (FS&T minus DOE outyear facility funding) -3.4% -5.3% Percent Real Change, FY FIGURE 3. Proposed constant-dollar changes (in percentages) in FS&T budgets by agency, FY 1994 FY Amounts for both DOE and Total FS&T are shown with and without DOE s proposed out-year facility funding. SOURCE: Table A.1. DOC. This year s increase would put DOC s FS&T budget at a level 17.0 percent higher than it was in NIH. NIH s FS&T funding has increased every year. Despite a very small increase from 1997 (less than 0.1 percent), the FY 1998 FS&T request for NIH would give it 8.8 percent more funds than it had in

14 DOT. This year s large increase (15.0 percent over 1997), if approved by Congress, would make DOT s FS&T budget nearly 7 percent larger than in NSF. FS&T funding at NSF has also remained above the 1994 level (1995 was the high point in real terms), and this year s increase will put it nearly 5 percent higher than in 1994 (but not above the 1995 level). DOE. As discussed above, DOE s FS&T budget is a special case because of the request to fund FS&T facility construction fully instead of year to year. Including the out-year funding i.e., the $883 million needed to fund future construction DOE s FS&T budget reverses its steady decline since 1994 and is 2.1 percent larger than it was then. Excluding the out-year funding and including only the amount allocated for facility construction in FY 1998, DOE s FS&T budget is nearly 12 percent smaller than it was in NASA. FS&T at NASA has been subject to that agency s downsizing, shrinking in 1995 and 1996 before stabilizing last year. This year s proposed increase would leave it 6.4 percent smaller than in EPA. EPA s FS&T budgets were also cut significantly in past years (by 17.6 percent in 1996 alone), so that last year s increase and the one proposed this year leave it nearly 10 percent smaller than in USDA. If the proposed cut of 6.3 percent from FY 1997 is approved, USDA s FS&T budget will be 12.6 percent smaller than it was in DOD. FS&T funding at DOD, which was essentially level from FY 1996 to FY 1997, would resume its steady decline since 1994 and would be 18.9 percent smaller in FY 1998 than it was in FY 1994, if the proposed budget is approved. In all, DOD s FS&T budget would be more than $1.7 billion smaller in 1998 dollars, more than accounting for the entire net real decrease in total FS&T between 1994 and Within that overall decrease, however, this year s 5 percent increase in basic research over 1997 (budget account 6.1) would make it 10.3 percent less than it was in 1994, while the applied research (6.2) and development (6.3) accounts would each be about 20 percent less than in 1994 (Table A.2). DOI. FS&T funding at the Department of the Interior is slated to get a 1.5 percent increase for FY 1998, but it would still be 22.5 percent less than it was in 1994, because DOI s FS&T budgets were cut significantly in 1995 and 1996 (by 8.1 and 16.3 percent, respectively). Other Agencies. As a group, the 16 other, smaller FS&T agencies would have 18.2 percent less FS&T funding than they had in 1994, despite an increase of 4.2 percent in

15 Trends in FS&T Compared with Trends in R&D and Discretionary Programs, FY 1997 FY 1998 and FY 1994 FY 1998 The FS&T budget is a major portion of the R&D budget, which in turn falls under the discretionary part of the federal budget; thus FS&T is affected by trends in the R&D and discretionary budgets, which have been decreasing in real terms since the early 1990s. The total FS&T budget is only 2.6 percent of the entire federal budget, but it is 8 percent of the discretionary part of the budget. The nondefense part of the FS&T budget ($33.8 billion of $45.3 billion in FY 1998) accounts for nearly 13 percent of nondefense discretionary funding. If the Clinton budget is adopted, budget authority for nondefense discretionary programs will go up 6.2 percent from 1997 to 1998 in real terms, after declining since 1993, but this easing of fiscal constraints would not result in a proportional increase in the 1998 FS&T budget request. 8% 6% FY FY % Percent Real Change 4% 2% 0% -2% -4% 2.0% -3.4% 0.0% -0.4% -3.0% 2.2% -6% -8% Total FS&T -5.3% (FS&T minus DOE out-year facility funding) Total Federal R&D -6.4% All Discretionary Programs -4.9% Nondefense Discretionary Programs Federal Budget Category FIGURE 4. Real changes in FS&T, federal R&D, and federal discretionary budget authority, FY 1997 FY Total FS&T is shown with and without DOE s proposed out-year facility funding SOURCE: Table A.3. The FS&T budget accounts for 60 percent of the R&D budget (they are compared in the appendix). Trends in FS&T and R&D are not always exactly the same, however, because the rationale for funding FS&T is not the same as that for funding the non-fs&t part of R&D, which includes the costs of final development and modernization of operational weapons systems. In 9

16 1997, for example, FS&T received a smaller increase than R&D from 1996 and a larger cut since 1994 in real terms (NAS, 1997). In 1998, in contrast, the budget asks for an increase in FS&T of 2.0 percent despite a cut in R&D of 0.2 percent (Figure 4). The difference between 1997 and 1998 results mostly from the location of the cuts in military R&D. In 1997, most of the funding increases in DOD R&D were in the systems development budget categories ( ) that are not FS&T. In 1998, the cuts are mostly from those same non-fs&t categories. If the 1998 budget request is adopted, FS&T and R&D funding will each be down almost the same amount since percent and 3.0 percent, respectively. If the switch in the FY 1998 request to out-year funding of FS&T facility construction at DOE is factored out, however, FS&T would do little better than R&D. Total FS&T growth would be flat, compared with R&D s slight cut, from 1997 to 1998, and the reduction of 5.3 percent from 1994 to 1998 would be larger than R&D s 3.0 percent cut. Impact of Trends on Performers and Fields In the current fiscal year (1997), FS&T funding at NIH is 8.8 percent greater than it was in 1994; at NSF, it is 3.6 percent larger, in real terms. The FS&T budgets of the remaining agencies are smaller by 10.8 percent overall. 6 This divergence, if it continues, could affect the allocation of FS&T funding among types of research institutions and among fields of research, because each agency tends to support certain types of performers and particular fields more than others. Performers. Each year, the agencies report how much R&D in their budget request they expect to go to colleges and universities for the conduct of R&D. It is not possible to determine how much of the federal R&D budget going to universities is in the FS&T budget, although most if not all of it is. Federally funded R&D in colleges and universities is slated to be 2.8 percent greater in FY 1998 than in FY 1994 (Figure 5), a modest increase that masks major shifts. NIH and NSF award nearly two-thirds of their R&D/FS&T funding to academic institutions. Because they have been growing, it is not surprising to find that their support of academic R&D rose significantly between 1994 and 1997 in real terms 9.2 percent and would go up again in Meanwhile, support of academic R&D by the remaining agencies is down by 20.7 percent since 1994 and would decrease further in the 1998 budget. As a result, colleges and universities are increasingly dependent on NIH and NSF. In 1998 NIH and NSF would provide 72.3 percent of the federal R&D funding for colleges and universities, compared with 67.9 percent in FS&T funding trends may also be affecting other research performers. Federal and industrial laboratories and federally funded R&D centers (FFRDCs), for example, receive most of their federal research support from agencies with declining FS&T budgets (Table A.5). This does not necessarily mean that performers that receive most of their support from agencies other than NIH and NSF are losing federal funding, but the situation should be monitored to ensure that the balance of funding allocations among institutions remains appropriate as downsizing takes place. 6 These numbers differ slightly from those in the last report (NAS, 1997) because they are based on more recent estimates of budget authority in OMB MAX system reports. 10

17 12 10 Billions of 1998 Dollars DHHS-NSF Other FS&T Agencies Fiscal Year FIGURE 5. Trends in federal funding of academic R&D by source of funding, FY 1994 FY 1998 (constant dollars). Does not include acquisition of facilities or major equipment. SOURCE: Table A.4. Fields. The differential growth rates of FS&T budgets among agencies imply a corresponding impact on research fields, because federal funding of research in a number of the nonbiomedical science and technology fields is heavily dependent on the agencies whose research budgets have declined in recent years. Researchers in the physical sciences and engineering, for example, receive nearly 90 percent of their federal research funds from agencies with declining FS&T budgets (Figure 6). The environmental sciences and mathematical and computer sciences receive more than three-quarters of their funding from such agencies. As in the case of performers, the fact that a field receives most of its federal research funding from agencies other than NIH and NSF does not necessarily mean that the funding has dropped. Data on federal R&D funding available ( only through 1994) do not yet show how increasing FS&T budgets in some agencies, and decreasing or stagnant budgets in others, are affecting the allocation of funds among research institutions and fields. 7 If the divergence between a few agencies with growing FS&T budgets and many agencies with shrinking budgets continues, however, the effect on the allocation of support among research fields should be tracked to see if adjustments are needed. 7 The actual allocation of federal R&D funding among categories of performers and fields is determined by surveys conducted by NSF that necessarily lag budgeting by several years. The latest available data are for Data on actual expenditures in 1995 and agency estimates for 1996 and 1997 will be released in the spring of

18 100% 80% 91.6% 79.4% 81.7% 90.4% 85.3% 75.9% Percent 60% 40% 59.5% 27.1% 20% 0% All Fields Life Sciences Physics Oceanography Computer Sciences Research Field Electrical Engineering Metallurgy/Mater ials Engineering FIGURE 6. Share of federal funds for research from agencies other than NIH or NSF, by selected field, FY 1994 (percent of federal obligations for each field). Includes basic and applied research, not the development part of FS&T. SOURCE: Table A.6. Social Sciences 12

19 References Department of Energy (DOE) 1997 FY 1998 Congressional Budget Request. DOE/CR vols. Washington, D.C.: Office of the Chief Financial Officer, U.S. Department of Energy. National Academy of Sciences (NAS)/National Academy of Engineering/Institute of Medicine/National Research Council 1995 Allocating Federal Funds for Science and Technology.Washington, D.C.: National Academy Press The Federal Science & Technology Budget, FY Washington, D.C. National Science Foundation (NSF) 1996a Federal Funds for Research and Development: Fiscal Years , Detailed Statistical Tables. NSF Bethesda, MD: Quantum Research Corp. 1996b Federal Funds for Research and Development: Fiscal Years , Federal Obligations for Research by Agency and Detailed Field of Science and Engineering. NSF Bethesda, MD: Quantum Research Corp. 1996c Data Brief, Federal Funding for R&D and R&D Plant to Drop in FY 1996; Department of Defense Survey Data Expanded, Vol. 1996, No. 3. Arlington, VA: National Science Foundation. Office of Management and Budget (OMB) 1997 Budget of the United States Government, Fiscal Year 1998.Several volumes. Washington, D.C.: U.S. Government Printing Office. 13

20 Appendix Methodology 8 The federal government does not currently collect budget data based on the FS&T definition used in this report. The agency and governmentwide FS&T budget figures given in this report were estimated by making adjustments in federal R&D data that are collected annually by the Office of Management and Budget. The basic and applied research budgets of all the agencies and departments are counted as FS&T. Budgets for development are also counted as FS&T at all agencies except DOD and DOE. Certain advanced development activities at those two agencies are excluded because they involve mostly the production engineering, testing and evaluation, and upgrading of large weapons and related systems rather than the development of new knowledge and technologies for future systems. Specifically, FS&T at DOD is considered funding only for those activities supported by the three R&D budget accounts that DOD itself considers to be its science and technology base, i.e., its budget categories for basic research (6.1), applied research (6.2), and advanced technology development (6.3). Determining the amount budgeted for FS&T at DOE is more difficult because, unlike DOD, DOE does not define and track subclassifications of its development activities in a way that clearly separates S&T from more systems-oriented upgrading, testing, and evaluation work. In this report, DOE s FS&T budget is approximated by subtracting the funding for several activities that clearly involve systems testing and evaluation or upgrading and modernization activities (i.e., the testing capabilities and readiness part of the weapons stockpile stewardship program, the naval reactors program, and associated facilities). In this report, all of NASA s R&D is counted as FS&T, because the space station is considered by the government a facility for the conduct of S&T and therefore should be included for the purpose of budget analyses. FS&T in this report also encompasses both the conduct of research and the support of research facilities, whereas the 1995 report counted only the conduct of research. These two refinements account for most of the difference between the nearly $43 billion estimated for FY 1994 FS&T in this report and the $38 billion estimated in the report, measured in 1994 dollars. More precise budget numbers for FS&T must await changes in the way the federal government accounts for R&D expenditures (the National Science Foundation has undertaken such an exercise for military R&D at the request of DOD as part of its annual reporting on federal funds for R&D, which could be expanded to other agencies). 10 In the interim, the purpose of this report and of the annual updates to follow is to track trends in FS&T using consistent definitions of which federally funded R&D activities are FS&T and which are not FS&T. The budget numbers are also adjusted for inflation using the GDP price deflator used by the Office of Management and Budget (1997). That procedure may understate the loss of buying power from inflation, because the price index for R&D is generally higher than the overall price index. 8 This description of the methodology is essentially the same as appeared in the last report (NAS, 1997). 9 There are some additional differences related to technical approach, especially the use of data on obligations in the 1995 report rather than the budget authority numbers used in this report. 10 See NSF, 1996c (also available at 14

21 Information on agency FS&T budgets is given in Tables A.1 through A.3. Table A.4 presents information on the amount of R&D funding going to colleges and universities, most if not all of which is FS&T. Tables A.5 and A.6 contain data on the allocation of federal research funds by categories of performers and research fields. FS&T Budgets Compared with R&D Budgets Trends in FS&T and R&D are unlikely to be greatly divergent because FS&T is a measure of a large and important part of R&D, the long-term part involving research and development of generic technologies that represent future investment (Figure A). FS&T excludes another important but different part of R&D, the part where the federal government pays for the shortterm development of technologies into specific products needed to carry out nonresearch goals. Examples include demonstration and validation of the Joint Strike Fighter; engineering and manufacturing development of the B-2 Advanced Technology Bomber; modernization of fighter, bomber, cargo, and tanker plane squadrons (B-52, A-10, F-111, C-5, KC-135, etc.); and development of the nuclear power plant for the New Attack Submarine. In its 1995 report, Allocating Federal Funds for Science and Technology(NAS, 1995), the Committee on Criteria for Federal Support of R&D reasoned that the criteria used to decide whether and how much to invest currently in technology-based systems are (and should be) different from those used to assess investment in the knowledge base for the new technologies underlying systems of the future. For example, decisions to develop a weapons system depend on an assessment of the requirements needed to respond to the current threats to national security; the latter focuses on the research and early-stage technology development that might be needed to respond to the national security environment of the future. Tracking DOD s R&D budget total does not distinguish, therefore, between long-range S&T investment and short-term spending to bring particular weapons systems into production (or to upgrade existing systems). Analyses of U.S. R&D often use supplementary measures to get around the problem of the large amount of R&D devoted to weapons systems. To measure U.S. effort in comparison with that of other countries, few of which have sizable defense R&D budgets, analysts usually compare nondefense R&D budgets. That approach leaves out the sizable chunk of spending on basic and applied research and generic technology development that DOD has historically provided in recent years between $7 billion and $8 billion annually (or about 18 percent of FS&T). Another common approach in R&D analysis is to look at basic research as a proxy measure of the nation s investment in long-term fundamental research, especially at universities. That measure is overly narrow. Focusing on trends in basic research alone implies an overly linear model of innovation that does not describe today s situation well in important fields such as biotechnology and computing and networking (if it ever did). It does not include substantial amounts of funding for applied research and development going to academia and nonprofit research institutions that support the rich and interactive mix of activities producing new knowledge and new technologies taking place in those institutions. 15

22 80 Billions of 1998 Dollars Facilities Development Applied Research Basic Research 20 0 FS&T 97 FS&T 98 R&D 97 R&D 98 Fiscal Year FIGURE A. Comparison of FS&T and R&D budgets, FY 1997 and FY 1998 (constant dollars). Facilities includes major equipment. SOURCE: OMB R&D tables and NAS analysis of FS&T in President s budget request for FY

23 Table A.1. Proposed FS&T Budgets in the President s FY 1998 Budget Request, by Agency (budget authority in millions of dollars) FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 Percent Change Agency Actual Actual Actual Estimated Requested FY97-98 FY94-98 In Current Dollars DOD 8,283 7,930 7,544 7,753 7, % -10.8% DHHS 11,293 11,519 12,040 12,933 13, % 19.3% - NIH 10,474 10,762 11,432 12,219 12, % 19.8% NASA 9,323 9,390 9,432 9,314 9, % 3.0% DOE 5,807 5,642 5,477 5,361 6, % 12.2% program 5,807 5,642 5,477 5,361 5, % -3.0% - out-year construction funding* NSF 2,212 2,431 2,422 2,458 2, % 15.4% USDA 1,543 1,542 1,488 1,545 1, % -3.8% DOC 866 1,164 1,040 1,050 1, % 28.8% DOT % 17.6% EPA % -0.5% DOI % -14.7% All Others 1,365 1,316 1,186 1,150 1, % -10.0% TOTAL FS&T 42,600 42,823 42,270 43,288 45, % 6.3% - without DOE outyear construction funding 42,600 42,823 42,270 43,288 44, % 4.2% In Constant (1998) Dollars DOD 9,116 8,516 7,934 7,955 7, % -18.9% DHHS 12,429 12,370 12,662 13,270 13, % 8.4% - NIH 11,528 11,557 12,022 12,537 12, % 8.8% NASA 10,261 10,084 9,919 9,557 9, % -6.4% DOE 6,391 6,059 5,760 5,501 6, % 2.0% program 6,391 6,059 5,760 5,501 5, % -11.8% - out-year construction funding* NSF 2,435 2,611 2,547 2,522 2, % 4.9% USDA 1,698 1,656 1,565 1,585 1, % -12.6% DOC 953 1,250 1,094 1,077 1, % 17.0% DOT % 6.9% EPA % -9.6% DOI % -22.5% All Others 1,502 1,413 1,247 1,180 1, % -18.2% TOTAL FS&T 46,885 45,987 44,453 44,416 45, % -3.4% - without DOE outyear construction funding 46,885 45,987 44,453 44,416 44, % -5.3% * DOE out-year construction funding is the amount of budget authority requested to convert the FS&T facility construction program of DOE from an incremental year-to-year basis to a full up-front funding basis beginning in FY It includes only the funding needed to finish projects in later fiscal years (1999 and beyond). The amount of budget authority needed during FY 1998 is included in the regular 1998 DOE budget. For example, the regular 1998 budget request includes an increment of $197.8 million to begin construction of the National Ignition 17

24 Facility in FY 1998, and the out-year amount includes an additional $678.6 million needed to complete the project in the years NOTE: The constant-dollar numbers were calculated by using the GDP deflators, published in OMB (1997), Historical Table 10.1, Gross Domestic Product and Deflators Used in the Historical Tables, (conversion factors: FY 1994, ; FY 1995, ; FY 1996, ; FY 1997, ; FY 1998, 1.000). SOURCES: For all agencies except DOD and DOE, the current-dollar budget figures in Table A.1 are from unpublished tables of OMB s MAX system. For DOD, the current-dollar totals for the 6.1 through 6.3 budget categories are taken from detailed budget tables supplied by the Office of the Director of Defense Research and Engineering (ODDR&E). Funding for civilian activities of the Army Corps of Engineers is not included here, however; it is included in all others. For DOE, the R&D figures reported by OMB are reduced by subtracti ng the naval reactors program and the testing capabilities and readiness activities of the weapons stockpile stewardship program, and related facility and major equipment funding (from DOE, 1997:Vol. 1, for FY and from unpublished tables of the AAAS R&D Budget and Policy Project for earlier years). 18

25 Table A.2. Proposed Real Changes within the FS&T Budget of the Department of Defense, FY 1997 FY 1998 and FY 1994 FY 1998 (budget authority in millions of 1998 dollars) S&T Base FY 1994 FY 1996 FY 1997 FY 1998 Percent Change Category Actual Actual Estimated Requested FY97 FY98 FY94 FY98 Basic Research (6.1) 1,298 1,156 1,108 1, % -10.3% Applied Research (6.2) 3,555 2,982 2,948 2, % -20.8% Advanced Technology Development (6.3) 4,264 3,795 3,899 3, % -19.9% TOTAL FS&T 9,116 7,934 7,955 7, % -18.9% NOTE: The constant-dollar numbers were calculated by using the GDP deflators, published in OMB (1997), Historical Table 10.1, Gross Domestic Product and Deflators Used in the Historical Tables, (conversion factors: FY 1994, ; FY 1996, ; FY 1997, ; FY 1998, 1.000). SOURCES: The current-dollar totals for the 6.1 through 6.3 budget categories are taken from tables supplied by the Office of the Director of Defense Research and Engineering (ODDR&E) and converted to 1998 dollars. Funding for the civilian R&D activities of the Army Corps of Engineers is not included here; it is included in all others. 19

26 Table A.3. Proposed Real Changes in FS&T, R&D, and Discretionary Budgets, FY 1997 FY 1998 and FY 1994 FY 1998 (budget authority in millions of 1998 dollars) FS&T (excluding DOE out-year construction) Total Federal R&D All Discretionary Programs Nondefense Discretionary Programs Total Fiscal Year FS&T ,885 46,885 77, , , ,987 45,987 76, , , ,453 44,453 75, , , ,416 44,416 75, , , ,286 44,403 75, , ,500 Change, FY 1997 to FY % 0.0% -0.4% 2.2% 6.2% Change, FY 1994 to FY % -5.3% -3.0% -6.4% -4.9% NOTES: All numbers are in budget authority. Current-dollar numbers are converted to constant 1998 dollars using the GDP deflators (conversion factors: FY 1994, ; FY 1995, ; FY 1996, ; FY 1997, ; FY 1998, 1.000). R&D includes FS&T. Without FS&T, R&D would fall 3.7 percent from the FY 1997 level, and 2.3 percent from the FY 1994 level. The discretionary budget numbers include R&D. SOURCES: FS&T numbers from Table A.1. Federal R&D numbers were calculated from current-dollar numbers taken from OMB s MAX system. Federal discretionary budget numbers were calculated from current-dollar numbers in OMB (1997), Historical Table 8.9, Budget Authority for Discretionary Programs,

27 Table A.4. Proposed Budgets for Conduct of R&D at Colleges and Universities in the President s FY 1998 Budget Request, by Agency (budget authority in millions of dollars)* FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 Percent Change Agency Actual Actual Actual Estimated Requested FY97-98 FY94-98 In Current Dollars DOD 1,495 1,541 1,430 1,435 1, % -9.9% DHHS 6,271 6,654 7,004 7,425 7, % 21.5% NASA % 10.2% DOE % -4.5% NSF 1,693 1,964 1,931 1,901 1, % 16.2% USDA % -4.1% DOC % 12.7% DOT % -16.9% EPA % 30.1% DOI % 6.4% All Others % -6.6% TOTAL R&D AT COLLEGES AND UNIVERSITIES* 11,727 12,445 12,580 12,979 13, % 13.1% In Constant (1998) Dollars DOD 1,645 1,655 1,504 1,472 1, % -18.1% DHHS 6,902 7,146 7,366 7,619 7, % 10.4% NASA % 0.2% DOE % -13.2% NSF 1,863 2,109 2,031 1,951 1, % 5.6% USDA % -12.8% DOC % 2.4% DOT % -24.5% EPA % 18.2% DOI % -3.3% All Others % -15.2% TOTAL R&D AT COLLEGES AND UNIVERSITIES* 12,907 13,364 13,230 13,317 13, % 2.8% *In FY 1994, about 59 percent of federal funding of R&D at universities and colleges was for basic research, 28 percent for applied research, and 13 percent for development work (not including approximately $3.3 billion for work at 18 federally funded R&D centers administered by universities and colleges) (NSF, 1996a). NOTES: The constant-dollar numbers were calculated by using the GDP deflators, published in OMB (1997), Historical Table 10.1, Gross Domestic Product and Deflators Used in the Historical Tables, (conversion factors: FY 1994, ; FY 1995, ; FY 1996, ; FY 1997, ; FY 1998, 1.000). SOURCES: The current-dollar numbers are from OMB s MAX system. 21

28 Table A.5. Sources of Federal Funds for Research, by Performing Institution, FY 1994 (actual obligations) Performer NIH NSF DOD NASA DOE Others Total In Millions of 1994 Dollars: Intramural 1, ,556 1, ,982 7,488 Industrial Firms ,395 1, ,063 Universities and 5,517 1,680 1, ,324 Colleges Other Nonprofits 1, ,095 FFRDCs , ,096 Others ALL PERFORMERS 9,080 2,040 4,262 3,841 3,282 4,934 27,440 In Percent: Intramural 20.8% 0.2% 20.8% 15.5% 2.9% 39.8% 100% Industrial Firms 8.5% 1.9% 34.3% 39.9% 4.3% 11.1% 100% Universities and 53.4% 16.3% 10.8% 5.4% 5.1% 9.0% 100% Colleges Other Nonprofits 64.8% 6.2% 3.8% 5.7% 2.4% 17.1% 100% FFRDCs 4.9% 4.1% 3.1% 11.3% 74.5% 2.0% 100% Others 40.9% 2.4% 6.7% 9.1% 1.4% 39.6% 100% ALL PERFORMERS 33.1% 7.4% 15.5% 14.0% 12.0% 18.0% 27,440 NOTE: Includes the basic and applied research, not the development, part of FS&T. SOURCE: NSF, 1996a. 22