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FY 2008 Data Show Downward Trend in Federal R&D Funding

NSF 09-309 | January 2009 | PDF format PDF  

by Melissa F. Pollak[1]

The most recent data from the National Science Foundation (NSF) show a $3.5 billion decline—from $116.7 billion in FY 2007 to $113.2 billion in FY 2008—in federal funds obligated for research and development and R&D plant (facilities and fixed equipment). Adjusted for inflation, the data reflect a 4.8% decrease in R&D and R&D plant obligations. The expected FY 2008 total is 7.3% lower, in constant dollars, than that recorded in FY 2005. In contrast, during the 4 preceding years (FY 2001–05) total obligations rose 22.2% in real terms (table 1).

TABLE 1. Federal obligations for research and development and R&D plant, by character of work: FY 1990–2008.

  Table 1 Source Data: Excel file

Both research and development funding contributed to the downward trend. Research, estimated to total $54.7 billion in FY 2008, and development ($56.6 billion) are expected to be down, in constant dollars, 2.5% and 6.5%, respectively, from their prior-year levels.

FY 2008 funding in this report is discussed in current dollars; cross-year comparisons in the remainder of this report are discussed in constant dollars. Because federal agencies provide projected figures for FY 2008 and preliminary figures for FY 2007, figures based on these data are estimates.

Federal Funding for Research

Obligations for research by all federal agencies declined at an estimated average annual rate of 2.1% between FY 2004 and FY 2008. In contrast, research obligations increased at an average annual rate of 6.9% between FY 1996 and FY 2003 (table 1). These trends are largely driven by funding from the Department of Health and Human Services (HHS), which accounts for more than half (53% in FY 2008) of total federal research support (table 2).

TABLE 2. Federal obligations for research, by agency in FY 2008 rank order: FY 1990–2008.

  Table 2 Source Data: Excel file

FY 2008 data show that for the first time, the Department of Energy (DOE) research budget is expected to exceed that of the Department of Defense (DOD). In descending order, the leading research-funding departments/agencies are HHS (with $28.8 billion in total FY 2008 research obligations), DOE ($6.5 billion), DOD ($6.1 billion), NSF ($4.4 billion), NASA (National Aeronautics and Space Administration; $3.2 billion), and USDA (U.S. Department of Agriculture; $1.8 billion). Together, these six agencies account for 93% of projected FY 2008 federal research dollars (table 2).

NSF is slated for the largest average annual increase between FY 2006 and FY 2008 (4.8%), followed by DOE at 4.1%. USDA and NASA are expected to have average annual decreases of 7.8% and 3.4%, respectively, for this period (table 2).

Basic Research

The annual level of federal basic research obligations declined at an average annual rate of 1.9% between FY 2005 and FY 2008. This downward trend may be part of a continuing slowdown in basic research funding by the federal government. For example, between FY 1998 and FY 2001 basic research obligations rose at an average annual rate of 10.0%. However, from FY 2001 to FY 2005 the average annual rate of growth slowed to 2.9%, and federal funding declined 5.2% from FY 2005 to FY 2006. Most recently there has been no real growth (table 1).

Basic research obligations accounted for about one-fourth (24.4%) of total projected R&D and R&D plant in FY 2008, several percentage points higher than levels registered throughout the 1990s but less than the 26.3% share recorded in FY 2002 (table 1).

Applied Research

Federal obligations for applied research show a trend similar to that for basic research. Between FY 1996 and FY 2004 the growth rate averaged 6.8% per year. However, since 2004 applied research obligations have fallen annually at an average rate of 2.9% through FY 2008, according to survey estimates. Applied research obligations have been close to 24% of the total federal R&D and R&D plant budget since FY 2005, down from a peak of 27.1% in 2001 (table 1).

Agencies' Funding for Research


HHS obligations for research showed annual double-digit percentage increases during the late 1990s and early 2000s, reflecting the government's goal during that period to double the budget of the National Institutes of Health.[2] Because of changing R&D budget priorities, however, those large gains ended in FY 2004. HHS has accounted for more than half of all agency-funded research since FY 2003, up from about one-third in 1990. Nearly all (96.3%) of the HHS research total was slated for the National Institutes of Health (table 3); with 81% ($23.4 billion) of FY 2008 HHS research funding planned in support of the life sciences (table 4).

TABLE 3. Federal obligations for research, largest agency funders: FY 2006–08.

  Table 3 Source Data: Excel file

TABLE 4. Federal obligations for research, by field of science and engineering and agency in rank order: FY 2008 projected.

  Table 4 Source Data: Excel file


Most of the $767 million increase in DOE research obligations between FY 2006 and FY 2008 is attributable to the Office of Science, which is responsible for obligating about half of the DOE research budget (an estimated $3.4 billion of the $6.5 billion DOE total in FY 2008). Approximately one-third ($2.2 billion) of the department's total research obligations is expected to go toward various defense-related programs in FY 2008. In contrast, the DOE Office of Energy Efficiency and Renewable Energy and Office of Fossil Energy together account for less than 10% of the department's research budget. Although the former is expected to have a hefty (percentage) increase between FY 2006 and FY 2008, the latter is not (table 3). Most of DOE research funds were slated to support projects in the physical sciences and in engineering, each having an estimated $2.5 billion in research obligations in FY 2008 (table 4).


DOD research obligations increased by more than a billion dollars between FY 2006 and FY 2007 and then dropped by about $800 million between FY 2007 and FY 2008, continuing a general pattern of decline that began in FY 2002 (table 3). With an estimated $6.1 billion in total research obligations in FY 2008, DOD's share of total agency-funded research was 11%, down from about 15% in FY 2001.

The Defense Advanced Research Projects Agency accounts for the largest share of the DOD research budget, an estimated 28% in FY 2008, followed by the Department of the Air Force at 23%. The Departments of the Army and Navy each accounted for 19% of the DOD total (table 3). Of total FY 2008 DOD research funding, nearly half ($3.0 billion) was planned in support of engineering (table 4).

Defense-related research (funded by both DOD and DOE) was expected to amount to $8.3 billion, or 15%, of total federal research obligations in FY 2008, down from $8.9 billion (16%) in FY 2007 (table 3).


Federal funds obligated for research by NASA were expected to decline an average of 3.4% per year between FY 2006 and FY 2008 (table 2). NASA estimated it would provide 87% of its total FY 2008 research funding in support of engineering ($1.2 billion), physical sciences ($854 million), and environmental sciences ($730 million) (table 4).


Although the NSF research budget was stagnant between FY 2004 and FY 2006, growth resumed after FY 2006 (table 3). Five field categories account for 88% of the FY 2008 NSF research obligations. The mathematics and computer sciences category and the physical sciences category are each expected to be 19% of the total, followed by engineering (18%), environmental sciences (17%), and life sciences (15%) (table 4).

Agencies' Funding for Development

Development obligations are expected to total $56.6 billion in FY 2008. After several years of substantial growth in the first half of this decade, estimated obligations for development show an average drop of 1.9% per year between FY 2005 and FY 2008 (table 1).

DOD accounts for most of federal development funding, an estimated 86.2% ($48.8 billion) in FY 2008. Most of those dollars ($44.0 billion) are obligations for major systems development projects. When they are subtracted from the total development figure, what is left is $4.8 billion (for advanced technology development), or 38.3% of the remaining $12.6 billion in FY 2008 federal development obligations. NASA is the second largest supporter of development (an estimated $4.1 billion in FY 2008), followed by DOE ($2.1 billion) (table 5).

TABLE 5. Federal obligations for development, largest agency funders: FY 2006-08.

  Table 5 Source Data: Excel file

Data Collection Notes

Data presented here are from the annual NSF Survey of Federal Funds for Research and Development FY 2006–08. Definitions of research, development, and R&D plant as used in this InfoBrief are provided in the technical notes section of the detailed statistical tables reports for this survey. For the prior-year report, see http://www.nsf.gov/statistics/nsf09300/.

The 30 federal agencies that report R&D obligations to the NSF Survey of Federal Funds for Research and Development submitted actual obligations for FY 2006 and preliminary data for FY 2007 and FY 2008. Data were requested from agencies beginning in February 2007. Agencies later revise the preliminary data on the basis of actual changes in the funding levels of R&D programs. Further, agencies may provide changes in prior-year data to reflect program reclassifications or other data corrections.

In FY 2004 NASA implemented a full cost budget approach, which includes all of the direct and indirect costs for procurement, personnel, travel, and other infrastructure-related expenses relative to a particular program and project. NASA's data for FY 2004 and later years may not be directly comparable to its data for FY 2003 and earlier years. Transition to the new system has delayed NASA's reporting of R&D data to NSF. Revisions in their methods of reporting R&D dollars have also delayed NIH and DOD responses to the survey.

The full set of detailed tables from this survey will be available in the report Federal Funds for Research and Development: Fiscal Years 2006, 2007, and 2008 at http://www.nsf.gov/statistics/fedfunds/. Individual detailed tables from the FY 2006–08 survey may be available in advance of the full report. For more information, please contact the author.


[1]  Melissa Pollak, Research and Development Statistics Program, Division of Science Resources Statistics, NSF, 4201 Wilson Boulevard, Suite 965, Arlington, VA 22230 (mpollak@nsf.gov; 703-292-7808).

[2]  See http://www.nsf.gov/statistics/infbrief/nsf02326/.

National Science Foundation, Division of Science Resources Statistics
FY 2008 Data Show Downward Trend in Federal R&D Funding
Arlington, VA (NSF 09-309) [January 2009]

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