Federal R&D Spending Rises in FY 2014, But Does Not Keep Pace With Economy

Though federal support for R&D increased in FY14, federal spending on research and R&D facilities is currently at its lowest point in a decade, according to new data from the National Science Foundation (NSF). After hitting an all-time high in FY09, U.S. federal funding for R&D slid downward for the four years. By FY13, funding for R&D, and R&D plant (buildings and fixed equipment), had fallen by 19.4 percent. Federal funds only began to tick back upward in FY14, when increased support for basic research, agriculture and natural resources led to a 2.4 percent increase. Proposed funding levels for FY15 would again provide a small bump for R&D, but at a rate lower than inflation.

Last week, SSTI examined federal spending on science and engineering for universities by state over the 10-year period from FY 2001-11 (see related article) and noted the sharp decline in support in the post-Recovery Act years. The current NSF release focuses on federal funding for R&D and R&D plant (facilities and fixed equipment) and only provides data at the national level, but clarifies that the disappearance of ARRA funds has had a large effect outside of universities and colleges.

Federal budget authority for R&D and R&D plant hit its lowest level since FY05 in FY13. From FY 2005-10 spending for research and research facilities grew by an average of 2.6 percent a year, as both Presidents Bush and Obama set ambitious goals for ramping up R&D spending. The economic crisis and failure to pass federal budgets, however, put an end to the growth and spending began to fall.

Taking inflation into account, the trend is even starker. NSF provides R&D budget authority figures in constant 2009 dollars, which show that R&D spending remains 12.5 percent below its level even in FY05.

Defense research has been particularly hard hit, declining by 18.5 percent since peaking in FY10. While defense R&D remained higher than nondefense as of FY14, the gap between the two has shrunk. In FY08, the year before ARRA, defense spending represented about 59 percent of all federal R&D investment. The Recovery Act provided a significant bump for nondefense spending, reducing defense to about 52 percent of total investment. The gap re-emerged after FY09, but support for federal R&D began to gradually drop as nondefense held steady. As of FY14, defense spending had returned to its ARRA-level share of total investment, 52 percent, and its lowest dollar amount since 2004.

Nondefense spending has fared better. Budget authority for basic research has held steady, in actual dollars since FY10, as has spending on natural resources and health research. Energy, space flight and agriculture research were hard hit in the post-ARRA years, but appear to have recovered. Only basic research and energy research, however, have grown in constant dollars since FY05.

Access the data…