Research and Development in the 1999 Budget:

An Overview

Introduction top

This report presents information on Federal proposed fiscal year (FY) 1999 budget authority for the research and development (R&D) components of agency programs. The data were submitted by Federal agencies to the Office of Management and Budget in early 1998. This report documents historical data not affected by current legislation and therefore can be used for tracking funding trends. The report also provides detailed data on Federal R&D authorizations not readily available from other sources.

Total R&D top

In the first half of 1998, the administration proposed total budget authority of $75 billion for FY 1999 for all Federal R&D programs, an increase of 2 percent from the estimated 1998 R&D total of $74 billion (table 1). After adjusting for expected inflation, proposed R&D budget authority will stay the same as the FY 1998 level. Budget authority for R&D grew 3 percent between FY 1997 and FY 1998 (an increase of 1 percent in constant dollars).

Table 1. Federal R&D budget authority, by budget function: fiscal years 1997-99

The largest 1999 R&D increase ($1 billion) is slated for health (budget function code 550), which mostly includes health programs of the National Institutes of Health (NIH).

Among individual functions, the largest FY 1999 R&D decrease ($0.2 billion) is slated for space research and technology (budget function code 252), which includes space programs of the National Aeronautics and Space Administration (NASA).

The administration proposed more than half (53 percent) of its FY 1999 R&D budget authority for defense (budget function code 050), which includes military programs of the Department of Defense (DoD) and the atomic energy defense activities of the Department of Energy (DOE). Proposed defense-related R&D funding is $39.7 billion in FY 1999, a slight decrease from the preliminary 1998 level of $39.9 billion. This proposed decrease reverses the rise of nearly 1 percent in budget authority for defense-related R&D between FYs 1997-98. However, R&D funding within the national defense function has continued to decrease in real terms since 1993 (with the exception of a 2.5-percent increase between FYs 1996-97). The proportion of R&D funds proposed for defense-related activities has declined from 59 percent in FY 1993 to 53 percent in FY 1999.

The proposed real decrease in defense-related R&D budget authority is offset by an increase in proposed funding of civilian R&D in FY 1999. Nondefense R&D funding is anticipated to grow by about 5 percent to $35.5 billion in FY 1999 (3 percent in constant dollars). Civilian-related activities represent 47 percent of Federal funding for the conduct of R&D.

The five largest budget functions with respect to R&D expenditures—national defense, health, space research and technology, general science, and natural resources and environment—together account for 92 percent of all proposed Federal R&D funding. The health and general science functions are expected to receive increased funding for R&D in FY 1999. Highlights of proposed R&D funding by function in the FY 1999 budget follow.

Distribution of Total R&D Budget Authority Among Functions top

The five largest R&D functions in FY 1999-defense, health, space research and technology, general science, and natural resources and the environment-account for 92 percent of all proposed Federal R&D budget authority. Transportation, energy, and agriculture each account for between 1 and 3 percent of Federal funding of R&D. The remaining eight functions each account for less than 1 percent of the total 1999 proposed R&D budget authority (table 2).

Table 2. Distribution of total Federal R&D budget authority, by function: fiscal years 1997-99

During the early and mid-1980s, practically all growth in Federal R&D support was defense-related (figure 1). Since FY 1986, however, defense R&D has dropped significantly from its peak 69-percent share of the Federal total to the proposed 53-percent share for 1999 (table 3). Despite this decline, defense is expected to receive more than two and one half times the budget authority for R&D than the next largest function, health.

Figure 1. Federal budget authority for defense and nondefense R&D: fiscal years 1980-99


Table 3. Federally funded R&D for national defense and civilian functions: fiscal years 1955-99

Proportions of only four functions of the total R&D budget authority are expected to be notably larger in 1999 than in 1998—health (18.4 percent of the total R&D budget authority in FY 1998 and 19.4 percent of the total R&D budget authority in FY 1999); general science (5.7 percent in FY 1998 and 6.2 percent in FY 1999); energy (1.6 percent in FY 1998 and 2.0 percent in FY 1999); and commerce and housing credit (0.5 percent in FY 1998 and 0.6 percent in FY 1999). Proportions for natural resources and the environment; agriculture; education, training, employment, and social services; international affairs; veterans benefits and services; community and regional development; administration of justice; income security; and general government are expected to stay approximately the same as in 1998. Based on the administration's budget proposal, proportions of three functions would drop notably in FY 1999—defense (54.1 percent of the total budget authority in FY 1998 and 52.8 percent of total budget authority in FY 1999), space research and technology (11.2 percent in FY 1998 and 10.7 percent in FY 1999), and transportation (2.6 percent in FY 1998 and 2.5 percent in FY 1999).

Basic Research top

The administration proposes to increase budget authority for basic research by 7.7 percent in FY 1999 to $17 billion (table 4). When adjusted for expected inflation, this would be about a 6-percent increase from the estimated FY 1998 level. The basic research share of total R&D budget authority has slowly increased from 15 percent in FY 1986 to the proposed 22 percent in FY 1999 (figure 2).

Table 4. Federal budget authority for basic research, by budget function: fiscal years 1997-99


Figure 2. Federal budget authority for basic research compared with total R&D budget authority: fiscal years 1986 and 1999

Four of the five largest R&D functions—defense, health, space research and technology, and general science—are also the largest basic research functions; they account for 90 percent of the basic research total (figure 3). Health ($8 billion) accounts for the largest share (47 percent) of the requested FY 1999 basic research total, followed by general science ($4 billion) and space research and technology ($1.7 billion). Defense accounts for $1.2 billion—or nearly 7 percent—of the proposed basic research total, but only 3 percent of the defense R&D total is basic research. (The basic research portion of the defense R&D total has remained at about 3 percent for the last eight years.) Of the nondefense R&D total, 44 percent is basic research.

Figure 3. Proposed Federal budget authority for basic research by budget function: fiscal year 1999

R&D's Share of Total Budget Authority top

R&D funding as a percentage of the total funding for functions in which R&D is conducted remains at about 8 percent (table 5). Since FY 1990, the percentage has fluctuated narrowly from a low of 7.6 percent in FY 1991 to a high of 8.2 percent in FY 1996. For functions that include R&D activities, only three (energy, general science, and space research and technology) are expected to be more than 60 percent of each function's total budget authority. (Energy R&D is greater than total energy budget authority because gross budget authority (spending) has been reduced by offsetting receipts, resulting in total net budget authority (spending minus receipts) that is less than R&D budget authority.) The R&D shares in the other functions range from a high of 15 percent for national defense to less than 0.1 percent for income security and general government. Only five functions (health, energy, natural resources and environment, veterans benefits and services, and commerce and housing credit) will show an increased share of their budget authority directed toward R&D in FY 1999. The R&D shares of four functions (defense, space research and technology, transportation, and agriculture) are expected to drop; the remaining functions' R&D shares will each stay at the FY 1998 levels.

Table 5. Federal R&D budget authority as a percentage of each function's total budget authority: fiscal years 1997-99

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