AAAS R&D Funding Update on FY 2007 Appropriations

(This report is a summary of AAAS estimates and analyses of federal R&D appropriations in the FY 2007 appropriations process; it will be updated based on later congressional action. Next week, the AAAS Preliminary Analysis of R&D in the FY 2008 Budget will be released, with the latest FY 2007 figures.)

Just days before the release of the President’s proposed fiscal year (FY) 2008 budget, the Democratic majority in the 110^th Congress filed a spending bill to finalize the FY 2007 appropriations bills left unfinished by the previous Congress. The ‘joint funding resolution’ provides funding for the entire fiscal year for all programs funded by the 9 unfinished FY 2007 appropriations bills covering most domestic programs, mostly at FY 2006 funding levels but with increases for selected programs. The new spending bill contains pleasant surprises for federal R&D programs: three key physical sciences agencies (including the National Science Foundation (NSF)) would receive increases as part of the American Competitiveness Initiative, the National Institutes of Health would receive an inflationary increase instead of flat funding, energy R&D funding would climb dramatically, and several R&D programs that had been operating at reduced funding levels until now would see their budgets boosted back to last year’s levels (see Figure 1). In addition, the spending bill is unusual in that it contains no congressionally designated earmarks, which in some cases results in large increases for core R&D programs within flat or declining overall budgets.

Figure 1. (click on image for PDF)

The proposed funding resolution, which may still be amended by the Senate or rejected by the President, when combined with already-enacted bills for defense and homeland security programs, brings the total federal R&D investment in FY 2007 to a record $139.9 billion (see Table 1), an increase of $4.6 billion or 3.4 percent. The entire increase would go to development programs in the Department of Defense (DOD) for weapons systems and the National Aeronautics and Space Administration (NASA) for new human spacecraft. The federal investment in basic and applied research would barely stay even with last year at $56.8 billion (up 0.2 percent; see Table 2), narrowly avoiding the first cut in federal research in at least 30 years, with increases for research funded by the three ACI agencies and NIH offset by steep cuts in NASA, Department of Homeland Security (DHS) and other agencies’ research portfolios. In inflation-adjusted terms, the federal research portfolio would decline for the third year (see Figure 2).

Figure 2. (click on image for PDF)

Highlights of Federal R&D in FY 2007 Appropriations

The current CR, enacted on December 9, allows federal programs in unfinished appropriations bills (all agencies except DOD and DHS) to keep spending money in FY 2007 at the lower of the FY 2006 or FY 2007 House spending levels through February 15. That CR, as outlined in the December AAAS R&D Funding Update, has resulted in flat or declining funding for many R&D programs and cuts in both nondefense R&D and the federal investment in research. The newly drafted year-long CR, called a ‘joint funding resolution,’ would extend funding for the entire fiscal year (through September 30) mostly at FY 2006 funding levels, but with a long list of exceptions that dramatically changes the funding outlook for R&D. Although most CRs are short one or two-page documents containing a simple funding formula, the joint funding resolution is a nearly 140-page document containing numerous exceptions to flat funding, including increases to selected R&D programs. (This analysis assumes funding levels as outlined in the joint funding resolution (H.J. Res. 20) as passed by the House and the two enacted Defense and Homeland Security appropriations bills. These figures could change after Senate action in the coming weeks.)

- President Bush’s American Competitiveness Initiative (ACI) of increases for three key physical sciences agencies is a winner in the funding resolution. The National Science Foundation (NSF), the Department of Energy’s Office of Science (DOE OS), and Commerce’s National Institute of Standards and Technology laboratories (NIST) all receive increases in their R&D funding as exceptions to the flat funding formula. Although all three agencies receive less than requested, the gains are a welcome change from the current CR, which holds their funding flat with last year. If these increases become final, NSF’s main Research and Related Activities (R&RA) account would receive the full 7.7 percent requested increase to $4.7 billion. DOE’s Office of Science would not get its entire 14 percent requested increase, but would still gain 6.0 percent. And the NIST laboratories would fall short of a 20 percent gain but would still do well with a 10 percent boost for their mostly physical sciences-oriented research.

- The National Institutes of Health (NIH) would also come out ahead in the funding resolution. Although the request and earlier appropriations would have kept the budget flat, NIH funding would increase by $600 million or 2.2 percent to $29.2 billion.

Figure 3. (click on the image for PDF)

- The federal investment in basic and applied research narrowly escapes a cut for the first time in at least three decades (see Table 2 and Figure 3). Federal research funding would total $56.8 billion, a small $93 million or 0.2 percent increase. Adjusted for inflation, federal research funding would decline for the third year in a row (see Figure 3). Although NIH support of research would hold steady in real terms and physical sciences-oriented research at the three ACI agencies would climb dramatically, cuts in research funding at other agencies, including physical sciences research at DOD, NASA, and DHS, would leave the federal research portfolio 5 percent below its 2004 peak in 2007 in real dollars.

- The federal investment in development hits an all-time high. Development funding would climb 6.4 percent or $4.8 billion to $79.0 billion (see Table 1 and Figure 2), continuing multi-billion dollar increases in each of the last six years. Nearly all development funding comes from the Department of Defense (DOD) for new weapons systems. DOD development funding for missile defense technologies and aerospace weapons climbs dramatically in FY 2007. NASA would cut research funding to shift resources to increased development efforts for the next generation of human space vehicles.

- Flat funding for “R” (research) combined with large increases in “D” (development) would help the total federal investment in R&D reach $139.9 billion in FY 2007, a 3.4 percent increase (see Table 1 and Figure 2). Support for R&D facilities and major equipment would drop 5.4 percent to $4.1 billion. Defense R&D would gain 4.4 percent to exceed $80 billion for the first time at $81.0 billion (see Table 1), while select increases for the ACI agencies, energy R&D, NASA, and NIH in the funding resolution result in a 2.1 percent boost for nondefense R&D to $58.8 billion. Defense R&D would make up 58 percent of the federal R&D portfolio, a ratio not seen since the height of the Cold War (see Table 3).

- Space-related R&D gains slightly by 3.8 percent (to $10.8 billion) because of increases for NASA’s spacecraft development funding, but the big winner in the funding resolution is an unexpected 15.3 percent increase for energy R&D programs to $1.6 billion (see Table 3). The additional funding would go heavily to DOE’s work on renewable energy sources such as solar, biomass, and hydrogen, and also to a new mandatory program on deep water and other unconventional fossil fuel extraction technologies. General science R&D, encompassing NSF and DOE OS, would also do well in the funding resolution with a 6.6 percent increase to $8.0 billion.

- The funding resolution would cancel all congressionally designated, performer-specific R&D projects (earmarks) in the unfinished FY 2007 appropriations bills. The bill does not contain report language normally attached to spending bills directing spending on specific projects, and in fact explicitly states that 2006 earmarks need not be funded in 2007. Although the CR adjusts some agency R&D totals downward to remove funds that were earmarked last year, for other agencies the elimination of 2007 earmarks enables non-earmarked R&D funding to increase substantially even within the flat funding formula of the funding resolution. DOE’s energy R&D programs, for example, not only get tremendous increases but also the added bonus of not having to fund earmarked projects. Similarly, NASA, EPA, and NOAA budgets are flat overall, but many R&D programs would receive increases because of money freed up from 2006 earmarks. After hitting a record $2.4 billion in 2006, R&D earmarks decline to $1.0 billion in 2007. Nearly all of the remaining earmarks are contained in report language accompanying the final 2007 DOD appropriations bill, which became law in October.

R&D Appropriations for Key Agencies

(Detailed funding tables for the agencies below are available on the AAAS R&D web site in PDF by clicking on the agency name.)

- A last-minute $600 million boost brings total National Institutes of Health (NIH) spending to $29.2 billion, up 2.2 percent. The Office of the Director (OD) budget would double to $1.1 billion (up 108 percent). OD takes over funding for the Common Fund for trans-NIH initiatives at $483 million, including a new $40 million for a Junior Pioneer awards program. Earlier this month, President Bush signed into law an NIH authorization bill that formally authorizes a Common Fund cutting across NIH institute and appropriations lines to fund trans-NIH initiatives such as the Roadmap for Medical Research. Most NIH institutes and centers (ICs) appear to receive the same budgets in 2007 as last year, but the transfer of trans-NIH funding from individual ICs to OD in 2007 should allow most ICs to increase their research funding by 1.2 percent. Only the National Institute of Child Health and Human Development (NICHD) would see a budget cut, of $11 million, but this is due to the transfer of the National Children’s Health Study from NICHD to OD, with funding expanding from $11 million in NICHD in 2006 to $69 million in OD in 2007. The National Center for Research Resources (NCRR) also receives an increase, of $34 million or 3.1 percent to $1.1 billion. The 2007 appropriation allows NIH to barely keep pace with economy-wide inflation in 2007 after two years of real cuts (see Figure 4), but leaves NIH 3 percent below 2004 funding in real terms.

- The National Science Foundation (NSF) would receive the full requested increase of 7.7 percent or $334 million for its core Research & Related Activities (R&RA) account to $4.7 billion. This funding would allow most research directorates to reverse declining funding of recent years with increases of between 6 and 8 percent. Total NSF R&D would climb 7.0 percent to $4.5 billion within a total budget of $5.9 billion, reversing two years of cuts in 2005 and 2006 (see Figure 4). The funding resolution leaves NSF’s major research equipment and education & human resources flat at last year’s levels instead of requested increases.

- The Department of Energy (DOE)’s Office of Science would not receive the full requested increase of 14 percent for its role in the ACI, but would still receive a substantial 6.0 percent boost to $3.5 billion for its R&D programs. OS can also tap $129 million in earmarked 2006 funds that are available but not earmarked in 2007. The increase should allow OS to proceed with its plans to boost basic physical sciences research, including a stepped-up US commitment to the multi-national International Thermonuclear Experimental Reactor (ITER) fusion project. DOE’s energy R&D programs would get a surprising last-minute boost of 16 percent to $1.5 billion, with increases exceeding 30 percent for key renewable energy programs and $50 million for a new mandatory R&D program in ultra-deepwater oil and gas extraction. As a bonus, the spending bill frees up $266 million in 2006 R&D earmarks that become unrestricted in 2007, meaning energy R&D programs that were heavily earmarked last year such as biomass R&D and hydrogen R&D would receive enormous increases in core funding. DOE’s defense R&D would decline 1.1 percent to $4.0 billion, mostly from the elimination of 2006 earmarks.

Figure 4. (click on image for PDF)

- The Department of Commerce’s R&D programs are unexpected winners in the funding resolution, after enduring steep cuts under the current CR. Total Commerce R&D would increase 3.8 percent to $1.1 billion. National Oceanic and Atmospheric Administration (NOAA) R&D, currently operating at sharply reduced funding levels, would return to last year’s levels with the added bonus that 2006 earmarks would be canceled, freeing up 2007 funding for core R&D programs. While the National Institute of Standards and Technology’s (NIST) laboratory programs would fall short of a requested 20 percent increase, the NIST labs’ role in the ACI would have 10 percent more than last year for an R&D total of $345 million. In addition, the spending bill saves the Advanced Technology Program (ATP), proposed for elimination, for another year and would keep the non-R&D Manufacturing Extension Partnership (MEP) program at last year’s $105 million level instead of the requested $46 million.

- The National Aeronautics and Space Administration (NASA) budget falls to $16.2 billion in 2007, but NASA R&D would rise 3.6 percent to $11.7 billion as non-R&D Space Shuttle funds are transferred to development work. Although less than requested, the Constellation Systems program to develop the Space Shuttle’s replacement would get $2.5 billion, a 43 percent boost that eats up the entire R&D increase and more (see Figure 5). Most NASA research programs in areas such as aeronautics, space sciences, and environmental sciences would remain at last year’s funding levels, but the former biological and physical research portfolio would be cut by as much as half, resulting in a dramatic 15 percent cut to NASA support of basic and applied research (see “All Other NASA R&D” in Figure 5 and Table 2). International Space Station construction would continue at $1.8 billion.

Figure 5. (click on image for PDF)

- Appropriators would strip out congressional earmarks in the U.S. Department of Agriculture (USDA) R&D portfolio, resulting in big gains for competitively awarded research grants despite an overall cut in USDA R&D to $2.3 billion (down 7.5 percent). Competitively awarded grants in the National Research Initiative (NRI) would gain $9 million to reach $190 million; Hatch Act funding would nearly double to an unprecedented $323 million, up from $177 million. Although Hatch Act funding is traditionally distributed by formula, it seems likely that the increase above the current level will be distributed competitively. These gains in competitive and formula funds would be offset by the elimination of earmarks: the Special Research Grants program of earmarked funds would fall from $127 million in 2006 to $0. For intramural R&D in the Agricultural Research Service (ARS), a $169 million cut down to $1.1 billion would be due entirely to the elimination of earmarks; ARS should have enough funding to increase its core R&D program portfolio.

- Congress finalized a Department of Defense (DOD) budget in October that contains a record-breaking $76.7 billion for DOD R&D (see Table 1). Nearly the entire $3.4 billion or 4.7 percent increase goes to weapons development programs. Once again, Congress reversed sharp proposed cuts in DOD’s “Science and Technology” (S&T) investments. Instead of a greater than 20 percent requested cut, DOD S&T spending remains near the 2006 funding level at $13.5 billion, $2.3 billion more than the request (see Table 1 and Figure 4). A small part of DOD’s R&D in the Defense Health Program is funded in the joint funding resolution; the bill provides $348 million for medical research, down a third from last year because of the removal of earmarked projects. The appropriation includes $218 million for congressionally designated but peer-reviewed cancer research programs, up $4 million from 2006.

- The Department of Homeland Security’s (DHS) R&D funding became final in October. DHS R&D falls 22 percent to $1.0 billion in 2007 even as the total DHS budget keeps increasing. Funding falls for most DHS R&D activities. Only DHS R&D activities in cybersecurity, interoperable communications, and radiological and nuclear countermeasures receive increases in 2007.

- The U.S. Geological Survey (USGS) within the Department of the Interior would see its R&D funding remain flat at $559 million, with some room from growth because $10 million in 2006 R&D earmarks would not be funded. The CR would be an improvement over a requested cut, and would allow USGS to continue mineral resources programs that the Administration proposed to cut.

- The Department of Transportation (DOT) would see its R&D funding decline 2.2 percent to $820 million (see Table 1) because of the elimination of some 2006 earmarks. Some earmarked R&D projects totaling $38 million would remain in DOT in 2007 because they are contained in the multi-year transportation authorization bill rather than last year’s appropriations bill.

- Environmental Protection Agency (EPA) R&D funding would remain at last year’s funding level of $600 million, an improvement over a $43 million requested cut. Core R&D programs could actually see increases because $33 million in 2006 R&D earmarks could be reallocated to other uses in 2007 under the terms of the funding resolution.

- The Department of Veterans Affairs (VA) would see its R&D funding remain flat at $765 million under the current funding resolution.

Budget Outlook: Almost Finished, as a New Budget Arrives

The House quickly approved the funding resolution on January 31 with little debate and no amendments. The Senate will take it up the week of February 5, just as the President’s FY 2008 budget proposal is released. The Senate is expected to debate the bill extensively, and may amend the bill before approving it. If the Senate amends the bill, then differences between the House and the Senate must be resolved in conference before the final bill goes to the President; if there are no amendments, then the bill can go to the President for his signature. Because the current CR expires on February 15, Congress has a hard deadline for clearing away this unfinished business by then in order to move to other legislation, including the FY 2008 budget.

For R&D programs, the conclusion to the protracted FY 2007 appropriations process is now in sight, although a few obstacles still remain. After many months of stalled appropriations bills and prognoses of flat or declining funding, the surprise adjustments in the current funding resolution keep the American Competitiveness Initiative on track and give hope to biomedical research advocates, even as other research programs are still caught in a tight domestic funding environment that shows few signs of changing.

(This analysis is one of a series of AAAS R&D Funding Updates on FY 2007 congressional appropriations. The complete series of AAAS R&D Funding Updates, including continually updated analyses of R&D in FY 2007 appropriations, is available on the AAAS R&D Web Site (http://www.aaas.org/spp/rd) in the "FY 2007 R&D" or the "What's New" sections. Beginning February 7, the "FY 2008 R&D" page on the AAAS R&D web site will begin coverage of the FY 2008 budget process; revised estimates of FY 2007 R&D will be incorporated into FY 2008 analyses going forward.)

- February 1, 2007
AAAS R&D Budget and Policy Program
1200 New York Ave, NW
Washington, DC 20005
(202) 326-6607
science_policy@aaas.org
http://www.aaas.org/spp/rd

Go to Tables
.

American Association for the Advancement of Science

New Congress Wraps Up 2007 Budget with Increases for Key R&D Programs;Overall Research Funding Flat

New Congress Wraps Up 2007 Budget with Increases for Key R&D Programs;
Overall Research Funding Flat