Federal agencies expect their funding for research and development (R&D) and R&D plant to decrease about 1 percent (2-percent decrease in inflation-adjusted 1992 dollars) to $72 billion in fiscal year (FY) 1998, according to survey reports received during the period May through August 1997. Development and R&D plant account for the R&D decrease, declining by 2 percent (a 4-percent decrease in constant 1992 dollars) and 13 percent (15-percent decrease in constant 1992 dollars), respectively, from estimated FY 1997 levels (to $40 billion and $2 billion, respectively). Research spending (including basic and applied research) will increase 2.5 percent (to $30 billion). But after adjusting for inflation, Federal obligations for research will rise slightly, by under 1 percent. Research accounts for 42 percent of the FY 1998 total R&D money. The estimated obligations provided in this report are subject to change as Federal agencies' budgets are updated to reflect approved programs.
Agency Total Funding Shares
Seven Federal agencies, out of the 31 that report to the R&D survey, account for 96 percent ($69 billion) of total projected Federal funding for R&D and R&D plant in FY 1998 (figure 1). The Department of Defense (DoD) will continue to comprise the largest share (48 percent), as it has throughout the 1990s, even though its funding will decrease 2.5 percent from its estimated FY 1997 level. Contributing to DoD's drop in overall R&D funding are the combined Defense agencies (9 percent decrease), the Army (8 percent decrease in its military functions component), and the Navy (4 percent decrease). Within the Defense agencies, the Ballistic Missile Defense Organization (BMDO) (down 24 percent), Washington Headquarters Services (WHS), and Special Operations Command (both down 7 percent) report the largest percentage decreases in proposed R&D funding. Also, the Office of the Director for Operational Test and Evaluation reports a 6-percent decrease in funding for R&D in FY 1998.
Funding from the Department of Health and Human Services (HHS) will comprise the second largest share of Federal agencies' R&D funding (19 percent), increasing by 1 percent from its FY 1997 level. Most (94 percent) of the HHS amount is from its National Institutes of Health (NIH) for support in the life sciences. The other top funding agencies are the National Aeronautics and Space Administration (NASA) (13 percent of the FY 1998 Federal R&D and R&D plant total), the Department of Energy (DOE) (9 percent), the National Science Foundation (NSF) (4 percent), the Department of Agriculture (USDA) (2 percent), and the Department of Commerce (DOC) (1 percent). Almost all (98 percent) of DOC's funding is from its National Institute of Standards and Technology (NIST) and National Oceanic and Atmospheric Administration (NOAA). Three of the 11 agencies within USDA reporting funding for R&D account for 94 percent of USDA's R&D obligations: Agricultural Research Service, $0.8 billion; Cooperative State Research, Education, and Extension Service, $0.4 billion; and Forest Service, $0.2 billion. DOC and USDA each estimate that combined R&D and R&D plant funding will decline in FY 1998, whereas such funding from DOE, NASA, and NSF is slated to increase.
R&D Growth in the 1990s
Of the seven major R&D funding agencies, DOC reports the largest estimated R&D and R&D plant funding annual growth rate for the FY 1990-98 period (11 percent, 8 percent in constant 1992 dollars) (table 1). DOC's growth reflects the rapid increases in funding at NIST which peaked at more than $0.6 billion in FY 1995. Even though reporting a projected small decrease in overall R&D funding in FY 1998, NIST increased its obligations from $131 million ($141 million in constant dollars) in FY 1990 to $510 million ($444 million in constant dollars) in FY 1998, representing an average annual increase of 19 percent (16 percent increase in constant dollars). However, the FY 1998 NIST R&D funding level is $130 million ($150 million in constant dollars) below what it was in FY 1995, representing an average annual decrease of 9 percent (7 percent decrease in constant dollars). HHS follows DOC with a 6-percent growth rate (3 percent in constant dollars) during the same period. NSF reports an average 5-percent growth per year (2 percent in constant dollars) for its R&D and R&D plant funding from FYs 1990--98. DoD's obligations drop on average 1 percent annually. In constant dollars, its funding decreases at an estimated annualized rate of 4 percent over this eight-year period.
As in the past, the Federal Government obligates the largest portion of its R&D dollars for development, which accounts for approximately 55 percent of the FY 1998 preliminary total R&D and R&D plant obligations. However, the development share has been decreasing throughout the 1990s, having declined from its peak 64-percent share in FY 1990 (figure 2). Agencies expect development funds to drop 2 percent (down 4 percent in constant 1992 dollars) from their FY 1997 level, to $40 billion ($34 billion in constant 1992 dollars) in FY 1998.
Six agencies account for 99 percent of estimated Federal development obligations in FY 1998 (table 2). These agencies are DoD (more than 80 percent from the three service agencies-Army, Navy, and Air Force), NASA, DOE, HHS (almost entirely from NIH), Department of Transportation (DOT) (more than 90 percent from the Federal Aviation Administration and Federal Highway Administration), and DOC (more than three-fourths from NIST). After adjusting for inflation, half of these agencies report an expected decrease in development funding for FY 1998: DOE (down 12 percent), DOC (down 6 percent), and DoD (down 5 percent).
To better understand the component pieces of Federal R&D funding and to allow a closer look at the funding activity of DoD agencies that report to the Survey of Federal Funds for Research and Development, NSF collects data on DoD development dollars in two categories: advanced technology development and major systems development. Advanced technology includes development for military and nondefense applications. Major systems includes testing and evaluation of mostly defense-related systems. This Federal Funds volume is the third report to include such statistics on development funding.
DoD expects to provide $26 billion (87 percent of its total development obligations) toward major systems development, which represents a 1-percent drop in FY 1998 (down 3 percent in constant 1992 dollars) (table 3). Combined, the Air Force, Navy, Army (its Military Functions component), and BMDO expect to account for $25 billion (95 percent) of the estimated major systems development obligations. However, three of these four DoD funders expect decreases in major systems development in FY 1998-Army and Navy expect declines of 1 percent and 3 percent, respectively, and BMDO is slated to drop 23 percent. Air Force will increase its funding by $0.6 billion (4 percent) in FY 1998, while from FYs 1996--97 Air Force increased its funding by nearly $1 billion (8 percent).
DoD reports that advanced technology development funding will decrease $0.6 billion (13 percent) to $4 billion in FY 1998. Six DoD agencies account for most (94 percent) of the estimated advanced technology development funding. They are the Defense Advanced Research Projects Agency (DARPA) ($1 billion for advanced technology development), BMDO ($0.7 billion), WHS ($0.4 billion), and the three service agencies, each with $0.4 billion. However, each of these agencies reports an expected decrease in funding for advanced technology development from FY 1997-Army down by $300 million, BMDO down by $200 million, Navy down by $100 million, DARPA down by $28 million, Air Force down by $16 million, and WHS down by $15 million.
Agencies' Funding for Basic and Applied Research
The share of Federal obligations for basic research has been increasing slowly since FY 1992. In FY 1992, basic research comprised 18 percent of total R&D. That percentage increased slightly each year and reaches 21 percent in FY 1998, according to preliminary estimates. Change in the applied research share has been similar to that for basic research throughout this period. In FY 1992, applied research accounted for 17.5 percent of the R&D total, and its FY 1998 share is also 21 percent. Overall, Federal agencies report a 4-percent average annual rate of growth (1 percent in constant 1992 dollars) for basic research from FYs 1990--98. Federal agencies report about a 5-percent average annual rate of growth (2 percent in constant 1992 dollars) for applied research during this same time period. When adjusted for inflation, however, basic and applied research funding each has held steady at about $13 billion since FY 1993.
The six lead agencies in basic research funding will account for 97 percent of the Federal basic research total in FY 1998 (figure 3). These agencies are HHS (almost entirely at NIH), NSF, DOE, NASA, DoD, and USDA. Of these six agencies, NASA and USDA report an expected decrease in basic research funding for FY 1998, dropping 5 percent (down $102 million) and 1 percent (down $7 million), respectively. Each of the other four agencies expects strong to modest increases in basic research funding in FY 1998: DoD (9 percent), DOE (5 percent), NSF (4 percent), and HHS (1 percent).
Seven agencies will account for 88 percent of the Federal applied research obligations in FY 1998. These agencies are HHS, DoD, NASA, DOE, USDA, DOC, and the Department of the Interior (DOI). DoD and USDA each reports an expected 3 percent decrease in applied research funding for FY 1998 (down $77 million and $24 million, respectively). DOC indicates that its FY 1998 applied research funding is nearly the same as its FY 1997 level. The other four agencies expect strong to modest increases in applied research funding: NASA (11 percent), DOE (6 percent), HHS (5 percent), and DOI (2 percent).
Research Funding by Science and Engineering Fields
Most basic research obligations support work performed in the life sciences ($7 billion), physical sciences ($3 billion), engineering ($2 billion), and environmental sciences ($1.5 billion), according to preliminary 1998 estimates. HHS provides the bulk (82 percent) of life sciences funding, while DOE is the largest Federal funder of basic research in the physical and environmental sciences, accounting for 33 percent of their combined total. NASA follows closely, funding 32 percent of basic research in these two science fields.
Agencies also provide more applied research support in the life sciences ($6 billion, mostly from HHS) than in any other field. However, agencies fund applied research in engineering second most (at $4 billion), largely provided by DoD (35 percent) and NASA (34 percent).
Data in the tables of this publication were derived from the Survey of Federal Funds for Research and Development and cover FYs 1996--98. They reflect research and development (R&D) funding levels as reported by 31 Federal agencies in February through August 1997. All agencies that were identified as conducting R&D programs were surveyed.
R&D totals in these tables are given in both outlays and obligations. The R&D obligation data are further categorized according to character of work (basic research, applied research, and development), performer, field of science or engineering (for research but not for development), and Federal R&D funding by State. Obligations for research performance at universities and colleges by fields of science or engineering are also shown, as are R&D plant data.
The amounts reported for each year are expressed in obligations or outlays incurred, or expected to be incurred, in that year, regardless of when the funds may have been authorized, appropriated, or received by an agency, and regardless of whether the funds are identified in an agency's budget specifically for research, development, or R&D plant.
Data for FY 1996 are actual, representing completed transactions. Data for FYs 1997 and 1998 are estimated because they do not represent final actions. The Survey of Federal Funds for Research and Development was conducted during the third quarter of FY 1997. The amounts reported for FY 1997 reflect congressional appropriation actions as of that period, as well as apportionment and reprogramming decisions as of that time. Data for 1998 represent administration budget proposals that had not been acted on. Authorization, appropriation, deferral, and apportionment actions that were completed after these data were collected will be reflected in later surveys of this series.
Accuracy of the data depends in part on the judgment of the respondent. Since many agency R&D programs are not identified as budget-line items, agency officials must identify R&D and R&D plant activities within broader programs. Over the years personnel of the participating agencies have developed increasing skill and consistency in meeting the survey requirements, and their interaction with the National Science Foundation staff has considerably increased the reliability of the data.
Inquiries relating to Federal Funds for Research and Development: Fiscal Years 1996, 1997, and 1998, Volume 46, should be directed to-
Ronald L. Meeks
Research and Development Statistics Program
Division of Science Resources Studies
National Science Foundation
4201 Wilson Boulevard, Suite 965
Arlington, VA 22230
Telephone: (703) 306-1772, ext. 6937
Fax: (703) 306-0508