Research and development in the 1996 budget: An overview

The information presented here highlights Federal agencies' submissions to the Office of Management and Budget as of May 1995 for fiscal years (FY) 1994 through 1996. Much work is currently ongoing in the Congress, as of this writing, that could result in significantly different FY 1996 totals than those proposed by the administration. A strength of this report is that it documents the overall distribution and growth patterns of Federal funding of the research and development (R&D) components of agency programs as proposed by the administration. Furthermore, historical data shown in this report will not be affected by current legislation, so that this report can be used for tracking historical data trends.

In the first half of 1995, the administration had proposed total budget authority of $70.5 billion for FY 1996 for all Federal R&D programs, a slight 0.3 percent more than the estimated 1995 R&D total of $70.3 billion (
table 1). After adjustment for expected inflation, R&D budget authority is proposed to decrease by about 3 percent. Budget authority for R&D grew by 3 percent between 1994 and 1995 (0.2 percent in constant dollars).

Among individual functions the largest R&D decrease ($0.9 billion) is slated 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). Defense-related R&D funding is proposed to be $37.6 billion in 1996, 2.5 percent lower than estimated 1995 levels. This proposed decrease reverses the rise of 2 percent in budget authority for defense- related R&D between 1994 and 1995. However, R&D funding within the "national defense" function has continued to decrease in real terms since 1993. The proposed real decrease in defense-related R&D budget authority is offset by a real increase in proposed funding of civilian R&D in 1996. Nondefense R&D funding is anticipated to grow by about 4 percent, to $32.9 billion in 1996 (less than 1 percent in constant dollars). Civilian-related activities represent 47 percent of Federal funding for the conduct of R&D. The proportion of R&D funds proposed for defense-related activities has declined 1.5 percentage points from 1995, from 54.8 percent to 53.3 percent.

The five largest budget functions with respect to R&D expenditures-national defense, health, space research and technology, energy, and general science-together account for 90 percent of all proposed Federal R&D funding. Three of the top five functions are proposed to receive increased funding for R&D in 1996; funding for national defense and space research and technology R&D are slated to decrease. Highlights of proposed R&D funding by function in the 1996 budget follow.

The five largest R&D functions in 1996-defense, health, space, energy, and general science-account for 90 percent of all proposed Federal R&D budget authority. Transportation, natural resources and the environment, agriculture, and commerce and housing credit each account for between 1 and 3 percent of Federal funding of R&D. The remaining seven functions each account for less than 1 percent of the total 1996 proposed R&D budget authority (table 2).

During the early and mid-1980s, practically all growth in Federal R&D support was defense related (chart 1). Since 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 1996 (table 3). Despite this decline, defense is proposed to receive over three times the budget authority for R&D than the next largest function, health.

Chart 1

Proportions of seven functions to the total R&D budget authority will be larger in 1996 than in 1995-Health; energy; general science; transportation; natural resources and environment; commerce and housing credit; and education, training, employment, and social services. Proportions for space research and technology, agriculture, veterans benefits and services, community and regional development, administration of justice, income security, and general government will stay the same as in 1995. Besides defense, only the international affairs' proportion will drop in FY 1996.

The administration proposes to increase budget authority for basic research by 4 percent in 1996, to $14.3 billion (table 4). When adjusted for expected inflation, this would be about a 1-percent increase from the estimated 1995 level. The basic research share of total R&D budget authority has slowly increased from 15 percent in 1986 to the proposed 20 percent in 1996 (chart 2).

Chart 2

The largest five R&D functions-defense, health, space, energy, and general science-are also the largest basic research functions; they account for 92 percent of the basic research total. Health ($6.3 billion) accounts for the largest share (44 percent) of the requested 1996 basic research total, followed by general science ($2.8 billion) and space research and technology ($1.7 billion). Defense accounts for $1.2 billion-or 9 percent-of the proposed basic research total, but only 3 percent of the defense R&D total is basic research. Of the nondefense R&D total, 40 percent is basic research (chart 3).

Chart 3

For functions that include R&D activities, the proportion of total budget authority requested for R&D varies considerably, from a high of 83 percent for energy to less than 0.1 percent for income security (general government had no R&D activities slated for FY 1996) (table 5). While remaining steady as a proportion of total Federal budget, R&D funding will continue to grow slowly as a proportion of total funding for the functions in which R&D is conducted, rising from 8.0 percent in FY 1995 to 8.1 percent in FY 1996.

Besides energy, only general science (69 percent) and space research and technology (61 percent) have one-half or more of their total funds proposed for 1996 directed toward R&D. Fifteen percent of defenserelated funding, 11 percent of funding for the health function, and 10 percent of natural resources andenvironment funding are proposed for R&D. Each of the remaining 10 functions has less than 10 percent of its total budget allocated for R&D: in five of these functions, R&D accounts for less than 1 percent of total funds. General government will have no R&D funding in FY 1996.

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