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R&D in the FY 2021 Omnibus: Review and Estimates

A tight fiscal environment meant modest increases for research funding in annual appropriations.

Over the holiday season, Congress adopted and President Trump signed the Consolidated Appropriations Act, 2021, the massive 5,000-page bill providing COVID-19 relief, annual appropriations for the 2021 fiscal year (FY), and an array of other policy measures. AAAS has produced a brief summary report (PDF) containing estimates and data tables for annual R&D appropriations in the bill, as well as R&D by agency and type (basic, applied, development, facilities) and agency highlights.

Readers can also visit the AAAS R&D Appropriations Dashboard for details, or see summary materials from the House Appropriations Committee.

Overall Research and Development

AAAS R&D estimates are based on Office of Management and Budget (OMB) and agency data by bureau or account and adjusted for appropriations. These estimates follow the recent OMB guidance that narrows the definition of “development” to “experimental development.” In practice, the most significant consequence of this is the exclusion of Department of Defense (DOD) operational systems development, contained in the department’s “6.7” funding account.[1] This account was worth $38 billion in FY 2020. AAAS estimates also exclude DOD’s new “6.8” account for software pilot programs, following OMB practice.

Lastly, AAAS estimates include DOD’s R&D management support funding, the “6.6” account, as R&D. Over the course of last summer, AAAS discovered that DOD had been excluding this account in their R&D reporting to OMB during budget preparation. Thus, DOD “6.6” spending was not included in the R&D figures that appeared in the FY 2021 budget request (or in the subsequent reviews of R&D in the budget). For this report, AAAS has kept “6.6” spending as R&D to maintain consistency with past practice, with guidance in OMB’s A-11 circular, and with R&D figures published by the National Center for Science and Engineering Statistics, a federal statistics office.[2]

 

Estimates for R&D in annual appropriations are shown in the above table. These initial estimates suggest Congress increased federal R&D by $1.4 billion in the omnibus. This increase was achieved entirely through increases to basic and applied research, which together were increased by an estimated $3.5 billion or 3.9% above FY 2020 levels excluding emergency COVID-19 R&D spending. See the appendix section of the summary report (PDF) for detailed estimates by agency and type of R&D.

The estimated 3.9% research increase is in accord with the varying discretionary increases provided to the largest research funders. These include, for example a 5.2% increase for Defense Science and Technology, and roughly 3% increases for both the National Institutes of Health (NIH) and the National Science Foundation (see graph below).

 

The estimated decline in development spending is somewhat surprising and likely related to agencies reclassifying their R&D activities. For instance, the FY 2021 budget request indicated an 8.6% decline NASA development, even with a massive proposed increase in what would seem to be exploration-relevant technology development. The Office of Fossil Energy also reclassified much of its spending from development to research in the Department of Energy (DOE) budget request.

The estimated decline in R&D facilities is in reality due to a spike in DOD spending in FY 2020 for laboratory revitalization projects, including R&D centers and test and evaluation facilities. This appears to have been a one-time spike, and no such DOD funding was requested in FY 2021. Excluding DOD, estimated R&D facilities spending in the omnibus actually increased by over $600 million.

Suffice to say these issues should serve as a warning of the potential vagaries of R&D accounting by federal agencies.

 

It’s also difficult to situate FY 2021 R&D in historical context. Federal R&D as a share of GDP is shown above. As a share of GDP, estimated research spending would reach 0.45%, the highest point in several years. However, this is primarily due to the recent drop in GDP estimated by the Congressional Budget Office (CBO) in its July 2020 baseline. Current development spending is no longer directly comparable with historical data due to the DOD “6.7” issue described earlier, which pushes total R&D spending lower.

AI, Quantum Among Few Prioritized Areas

While the ultimate spending changes were modest, there are a handful of areas worth noting. The White House had made artificial intelligence and quantum information science (QIS) major priorities in their budget request, pledging to double funding for related research over two years. This pledge was mostly centered on the National Science Foundation (NSF) and the DOE Office of Science, but other agencies were involved as well.

Appropriations have mostly reflected these priorities. For research on AI and machine learning, Congress provided NSF with $868 million, a 76% increase above FY 2020 levels. The Office of Science received not less than $100 million, a $29 million or 40.8% boost, though shy of the $125 million request. For QIS, NSF received its funding request of $226 million, $100 million above the current year, while the Office of Science received $245 million, a $50 million increase.

At other agencies, the National Institute of Standards and Technology (NIST) received a $6.5 increase above FY 2020 each for AI and quantum science. NIH received $105 million for machine learning and data science activities. Congress also provided an $840 million increase to DOD science and technology programs, where AI and quantum are among the research priorities. This included some targeted increases, such as a $10 million boost for the Air Force Research Lab’s quantum science center, and several others for AI.

Amid another billion-dollar increase for NIH, Congress continued its prioritization of Alzheimer’s disease research within the life sciences portfolio. NIH Alzheimer’s research funding received a $300 million increase above FY 2020, pushing total expenditures above $3 billion.

A handful of other areas received moderate increases but are notable for having been singled out for some of the deepest cuts in the FY 2021 budget request. This included energy technology R&D, climate science, advanced manufacturing programs, and STEM education.

In addition, several programs supporting minority institutions – including historically black colleges and others – received marginal preference over certain other education programs. For instance, Hatch Act funding for agricultural experiment stations at the original 1862 land-grant universities received flat funding, while research capacity funds at historically black colleges (the 1890 land-grants) were increased by $6 million. At DOD, support for activities under the broad National Defense Education Program was reduced, while funding to support minority-focused institutions was increased by $29 million or 54%. At NIH, the National Institute on Minority Health and Health Disparities received a 16.4% year-over-year increase, the largest of any institute in a year where most received under 3% increases.

Download the report for more details and R&D data tables.

 

[1] For background on this issue, see “The Federal Government is Tweaking What Counts as R&D: Q&A,” AAAS, June 2018: https://www.aaas.org/news/federal-government-tweaking-what-counts-rd-qa

[2] For more information, see CRS report R44711 on DOD’s RDT&E structure, especially the chart on page 6: https://fas.org/sgp/crs/natsec/R44711.pdf