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FY14 Federal Budget Request Overview

April 17, 2013

Each year, SSTI provides Digest readers with a comprehensive review of technology-based economic development spending in the the president's federal budget request. The year's edition includes proposed FY14 spending on R&D, STEM education, manufacturing, broadband, small business support, technology transfer, entrepreneurship, innovation workforce initiatives and more.

The full report is available for download in pdf format (626 kb).

President Obama's FY14 budget request would offer increased funding for many programs of note to the technology-based economic development community. Manufacturing-related initiatives, in particular, have been prioritized by the administration, with increased funding for existing programs and the launch of several new manufacturing initiatives in several agencies. The budget also would provide increased funding for clean energy research and implementation, and a major reorganization of the federal government's science, technology, engineering and mathematics education programs.

Each year, SSTI's analysis of the president's budget request includes comparisons between the proposed level of funding for agencies, offices, programs and initiatives, and past funding levels. Due to the lack of a FY13 budget and adjustments due to sequestration, the budget requests published by federal agencies this year include comparisons to a variety of past funding levels. When reading this year's Federal Budget Special Issue, please refer to the note at the beginning of each agency section to clarify the reference level for comparisons. For comparisons in the Budget Overview, please refer to the agency sections to find the basis for comparisons.

Entrepreneurship, Regional Innovation and Capital Access
The FY14 budget request would provide $320.9 million (24.6 percent increase) for the Department of Commerce Economic Development Administration (EDA), including $282 million (28.2 percent increase) for its Economic Development Assistance Programs. The increase would help support two new regional economic development initiatives. The Investing in Manufacturing Communities Fund, a multi-agency effort to strengthen communities' ability to attract inbound investments, would receive $113 million from the EDAP allocation (details in the Manufacturing section). The Regional Export Challenge, a competitive grant program to support regional export plans, would receive $12 million. Though a budgetary figure is unavailable, EDAP would continue to support the i6 Challenge.

Under the president's FY14 budget request, the Small Business Administration would expand significantly its regional innovation efforts and entrepreneurship education programs, particularly for military veterans. The budget proposes $5 million (no change) for SBA's Regional Innovation Clusters program, which supports 56 industry clusters around the country. Another $5 million would fund a new Growth Accelerators program, which would provide matching grants to university and private sector accelerators.

SBA's Entrepreneurship Education Emerging Leaders program, which provides intensive training to small business owners, would receive $40 million. The program initially was introduced in 2008, but the revamped version would become a public-private partnership, funded with SBA and private matching funds. SBA would expand its pilot programs to assist veterans in becoming entrepreneurs by providing $7 million to the Boots to Business initiative. The initiative offers training and resources to veterans to help them start their own businesses. SBA would receive a total of $120 million for its Small Business Development Centers, Women's Business Centers and SCORE program.

SBA ONE, a streamlined one-stop lending platform for SBA's loan programs, would attempt to simplify the lending process for lenders and borrowers. SBA would be able to provide $25 billion in small business financing including $17.5 billion in 7(a) loan guarantees and $7.5 billion in guarantees through the 504/Certified Development Company (CDC) program. The authorization for the 7(a) loan guarantee program, includes $15.7 billion for term loans and $1.8 billion in revolving lines of credit. The budget would increase the Small Business Investment Company's (SBIC) authority from $3 billion to $4 billion, including up to $200 million for the SBIC Innovation Fund and $200 million for the SBIC Impact Fund.

As first proposed in 2012, the president continues to seek reorganization authority to streamline federal business assistance. Though full details currently are not available, the White House budget document on Creating a 21st Century Government proposes the consolidation of business and trade promotion activities into a single federal department. The new department would incorporate the Department of Commerce's (DOC) core business and trade functions, the Small Business Administration (SBA), the Export-Import Bank, the Overseas Private Investment Corporation and the U.S. Trade and Development Agency. Specific programs and offices for other departments, including the Department of Agriculture business development programs, the Department of the Treasury Community Development Financial Institutions Fund program, the National Science Foundation (NSF) statistical agency and industry partnership programs and the Bureau of Labor Statistics, also would be relocated.

The Department of Treasury New Market Tax Credit program would be extended permanently under the FY14 request. The extension would allow up to $5 billion in qualifying investments each year. Treasury's Community Development Financial Institutions Fund Core Program, would receive $144.3 million to invest in institutions and people and communities without access to affordable financial products. A new program, the Pay for Success Fund, would receive a one-time $300 million to provide credit enhancements and grants to support nonprofit institutions with the implementation of social impact bonds.

U.S. manufacturing is emphasized as a key priority throughout the president's budget request. The proposed budget includes $2.9 billion in advanced manufacturing R&D within several agencies, an 87 percent increase, according to an Office of Management and Budget release. This total includes $365 million for the Department of Energy Office of Energy Efficiency and Renewable Energy's Advanced Manufacturing Office, a three-fold increase over FY12 enacted funding. This allocation would support one or more Manufacturing Innovation Institutes focused on clean energy and energy efficiency technologies. Another $159.7 million (44.3 percent increase) would support advanced manufacturing research at the National Science Foundation.

The National Institute of Standards and Technology would receive $1 billion in mandatory appropriations to support the National Network for Manufacturing Innovation. The initiative would expand the network of across the country, funding 15 new manufacturing innovation institutes. Later this year, the administration would launch three new manufacturing innovation institutes led by the Departments of Defense and Energy in partnership with the private sector. NIST also would launch the Advanced Manufacturing Technology Consortia, a $21.4 million public-private partnership that would offer grants to identify long-term industrial research needs.

NIST's Hollings Manufacturing Extension Partnership (MEP) would receive $153.1 million (13.4 percent increase), including an increase of $25 million to launch Manufacturing Technology Acceleration Centers that could serve as a coordination point for regional manufacturing supply chains.

EDA would provide $113 million through its Investing in Manufacturing Communities Fund to provide grants to approximately five communities across the country for manufacturing parks, research centers and academic centers. EDA, however, will not be acting alone. The Investing in Manufacturing Communities Partnership would coordinate federal assistance from several agencies to make long-term investments in regional partnerships between government, universities and private industry.

Science and Technology
The president's FY14 budget proposes $142.8 billion (1.3 percent increase over FY12 enacted level) for federal research and development (R&D), according to a release from the Office of Science and Technology Policy (OSTP). This includes $69.6 billion (9.2 percent increase) for non-defense R&D. These increases would be offset by reductions in defense R&D spending within the Departments of Defense and Energy, which would total $73.2 billion (5.2 percent decrease). Total funding for basic and applied research across all agencies would be increased to $68.1 billion (7.5 percent increase), while development funding would be reduced to $71.5 billion (5 percent decrease).

Clean energy research programs would receive a boost under the proposed budget. The administration would continue its "All of the Above" strategy, expanding funding for many clean energy research areas. Department of Energy (DOE) clean energy R&D funding would be increased by 40 percent, while a number of new DOE programs would expand the federal government's focus on clean and renewable sources. A proposed Energy Security Trust would invest over the next ten years in alternative fuels transportation research with funds from federal oil and gas development. A new $200 million Race to the Top program would support state energy efficiency and grid modernization efforts. The budget also would provide $325.6 million for the EV Everywhere Grand Challenge, which would focus on breakthroughs in plug-in electric vehicle technology.

Federal research agency highlights include:

  • National Institutes of Health — $31.3 billion (1.5 percent increase)
  • National Science Foundation — $7.6 billion (7.3 percent increase)
  • DOE Office of Science — $5.2 billion (4.4 percent increase)
  • NASA Science — $5 billion (1.1 percent decrease)
  • Defense Advance Research Projects Agency — $2.9 billion (1.8 percent increase)
  • DHS Science and Technology Directorate — $1.5 billion (126.9 percent increase)
  • U.S. Geological Survey — $1.2 billion (8.6 percent increase)
  • EPA Science and Technology — $783.9 million (1.9 percent decrease)
  • NIST Intramural Laboratories — $754 million (21 percent increase)
  • NASA Space Technology — $742.6 million (29.4 percent increase)
  • USDA Agriculture and Food Research Initiative — $383 million (44 percent increase)
  • Advanced Research Projects Agency-Energy — $379 million (37.8 percent increase)

Funding for multi-agency initiatives includes:

  • Networking and Information Technology Research and Development Program — $4 billion (4.2 percent increase over FY12 enacted)
  • U.S. Global Change Research Program — $2.7 billion (6 percent increase over FY12 enacted)
  • National Nanotechnology Initiative — $1.7 billion (8.6 percent decrease over FY12 enacted)

To boost private sector investment in research, the budget also proposes to expand, simplify and make permanent the federal Research and Experimentation tax credit.

STEM Education and Workforce Training
Under the proposed budget, the federal government's programs to improve science, technology, engineering and mathematics (STEM) education would undergo a comprehensive reorganization. Nearly 90 programs across 11 agencies would be consolidated under the Department of Education (ED), the National Science Foundation (NSF) and the Smithsonian Institution. Almost $180 million would be directed to these agencies from consolidated programs. ED would focus on programs to improve K-12 STEM instruction and the president's goal of generating 100,000 effective STEM teachers over the next decade. NSF would lead programs to enhance U.S. undergraduate STEM education and graduate fellowships.

ED's expanded STEM initiatives would include $265 million for STEM Innovation Networks, a program that would offer competitive grants to local education agencies in partnership with institutions of higher education, nonprofits, other public agencies and businesses to prepare students for STEM careers. Of this amount, $35 million would help launch a new STEM Master Teacher Corps pilot program, and $80 million for competitive grants to recruit and train effective STEM teachers for high-need schools.

NSF would receive $123.1 million for a new initiative that would consolidate the federal government's efforts to improve undergraduate STEM education. The Catalyzing Advances in Undergraduate STEM Education (CAUSE) program would support research and implementation of improved STEM instructional practices. NSF's National Graduate Research Fellowship program would receive $325.1 million (64.3 percent increase) to expand the quality and availability of fellowships.

The Smithsonian Institution would receive $25 million to expand its efforts to improve informal STEM education activities.

The budget would provide $8 billion for the Community College to Career Fund, a successor to the Trade Adjustment Assistance Community College and Career Training Grants program. The fund, which would be jointly administered by the Departments of Education and Labor, would support state and community college partnerships with business to improve the skills of U.S. workers. The Department of Labor's Workforce Innovation Fund would receive $150 million, a $100 million increase, to innovation in state and regional efforts to train skilled workers.

A detailed write-up in a special pdf report on the FY14 budget proposal can be downloaded here. Agencies included in the report are:

federal budget, entrepreneurship, sba, stem, manufacturing