State agencies' R&D sees slight increase in FY 2021

State government agencies’ expenditures for research and development totaled nearly $2.5 billion in FY 2021, an increase of 1.1% from FY 2020, but far below the year-over-year inflation of 6.4% when measured in February 2022. The findings on state R&D were recently reported by the National Center for Science and Engineering Statistics (NCSES). The sluggish state spending was exacerbated by real decline in extramural share of federal R&D spending in FY 2021. Intramural R&D by feds grew from 30.7% of total in FY 2020 to 35.8 percent in FY 2021 (see https://ncses.nsf.gov/pubs/nsf22323).

While the report finds that state R&D spending remains largely focused on applied R&D, it continues to shift toward experimental development (+23.7%) and away from basic R&D (-8.1%).  While  health-related R&D remained the largest category of state agency R&D in FY 2021 with over $1.0 billion in expenditures, increasing just 0.3% from FY 2020, R&D on environmental and natural resources declined from $448 million in FY 2020 to $429 million in FY 2021, but remains the second-largest functional area. Energy-related R&D increased 5.1% in FY 2021 while agriculture R&D declined 15.7% and environmental R&D spending decreased 4.4%.

As new faces fill state government following the election, states will need to consider whether they are prioritizing R&D investments to address the most foundational and urgent needs to sustain the well-being and economic vitality of their residents and businesses as the pace of climate change and corresponding impacts accelerate.

The full survey of state government R&D for FY 2021 is available here and the corresponding InfoBrief here.