We estimate that federal R&D funding will reach $140.9 billion in FY 2012, a decline of 1.8% from our estimate of actual FY 2011 R&D funding ($143.5 billion) and 4.7% lower than the administration’s FY 2012 R&D funding request. Adjusting for a 2012 inflation rate estimate of 2.0%, this FY 2012 level of federal R&D funding represents a decline in real terms of 3.8% compared with FY 2011. Defense-related R&D accounts for 54% of total federal R&D in FY 2012, reaching $76.7 billion. This level of defense-related R&D represents a decline of 3.2% from FY 2011. The outlook for non-defense-related R&D is better (a current decline of less than 1.0%); yet at slightly more than $64.2 billion, it is the lowest it has been in the past four years.
These estimates are made as key FY 2012 agency budgets remain uncertain following the long delay in finalizing the FY 2011 budget and the current delay in reaching a complete agreement on the FY 2012 budget. The FY 2011 budget was completed in April 2011, through an omnibus Department of Defense (DOD) and Full-Year Continuing Appropriations Act, 2011. Hence, the federal government operated in FY 2011 for more than six months under various continuing resolutions and spending freezes. Progress is being made on the FY 2012 budget as the recent continuing resolution also included a final appropriations “Mini-Bus” bill. This bill, the Consolidated and Further Continuing Appropriations Act, 2012, finalizes the budgets of several agencies, most notably from an R&D perspective, the Departments of Agriculture, Commerce, and Transportation and both the National Science Foundation (NSF) and NASA. However, the overall budgets for the three largest R&D funding agencies, the Departments of Defense and Energy and the National Institutes of Health (NIH), are currently operating under the continuing resolution, until at least mid-December.
Moving forward, the total FY 2012 R&D budget is likely to be constrained, although probably less so than the overall federal budget. Significant gains are unlikely, although budget priorities and authorizations established by the America COMPETES Act will likely provide positive context for funding key basic research agencies. As discretionary spending, federal R&D budgets will continue to attract attention in the quest to reduce spending. Finally, the inability of the congressional deficit-cutting Joint Select Committee (also known as the Super Committee) to reach an agreement on budget cuts or revenue enhancements may weigh on the finalization of the remaining FY 2012 R&D budgets, and future R&D budgets may face significant reductions.
According to the Office of Science and Technology Policy (OSTP), the administration’s FY 2012 request for R&D funding was $147.9 billion at the start of the budget process—an increase of less than 1% over the final FY 2010 R&D budget, but up 3.1% from our estimate of FY 2011 federal R&D spending. Under this request, the three agencies most associated with federally funded basic research—the NSF, the NIH, and the Department of Energy’s Office of Science—would receive substantial increases in line with the America COMPETES Act. Additionally, the Department of Homeland Security would receive an R&D increase, taking into account that its final FY 2011 budget was dramatically below the administration’s original request.
However, budget actions and other indications from Congress suggest that the R&D budget could be significantly lower than the administration’s FY 2012 request. This is a fundamental assumption that we have factored into the FY 2012 forecast provided above.
The preceding estimates and observations are based on the analysis and insights of the OSTP, the American Association for the Advancement of Science (AAAS) R&D Budget Program, congressional committee reports, the Third Quarter 2011 Survey of Professional Forecasters, and other sources.
Department of Defense
Like last year, the FY 2012 defense appropriation is one of the last to be considered. As a result, DOD’s FY 2012 R&D budget remains particularly uncertain. Current estimates of the ranges for DOD R&D being considered by Congress are between $73 billion and $76 billion, with the higher amount closer to the administration’s request. Within this range, the final FY 2012 DOD R&D budget would decline for the third consecutive year.
Accordingly, our estimate is $75.0 billion, a 3.2% decline from FY 2011’s $77.5 billion and a 7.2% decline from the FY 2009 high of $80.8 billion. At $75 billion, DOD R&D still accounts for 53% of total federal R&D funding for FY 2012, but its reduction accounts for more than 75% of the total reduction in federal R&D funding from FY 2011 to FY 2012.
National Institutes of Health
An unusual amount of debate is occurring this year regarding the NIH budget, which accounts for the majority of the Department of Health and Human Services (HHS) R&D budget. The administration requested an increase, related to the America COMPETES Act, of slightly more than $1 billion. The House Appropriations Committee proposed an R&D budget that equaled the president’s request, while the Senate Appropriations Committee proposed $1.2 billion less than the president’s request. This funding differential is tied to debate over the NIH’s proposed development of a new National Center for Advanced Translational Science (NCATS). This new center would assume some of the functions of the National Center for Research Resources, which is slated for termination. The NCATS concept was presented as a new NIH strategic initiative after the administration’s FY 2012 budget was released. Reconciliation of the House and Senate proposals for NCATS, which would involve a significant research component, will be an important factor in the total NIH budget. Our estimate for FY 2012 funding is $30.6 billion for the NIH, with a total of $31.7 billion for all of the HHS. At this level, the NIH will receive slightly less (0.4%) than our FY 2011 estimate, and the HHS overall will receive 0.6% less than in FY 2011.
Department of Energy
The administration requested nearly $13 billion for DOE R&D funding in FY 2012, an increase of nearly $2.8 billion. This involves the multi-year track for doubling funding of the Office of Science according to the America COMPETES Act, as well as sizable increases in funding for research performed by the National Nuclear Security Administration and the Office of Energy, particularly for the latter in the fields of energy efficiency and renewable energy. Congress to this point has indicated a preference to scale back the growth in the Office of Science and hold many areas outside the Office of Science to budget levels similar to FY 2011. Our estimate projects that “basic research” funding will be subject to the most compromise, yielding a final DOE FY 2012 R&D budget of $10.6 billion, $2.3 billion less than the request, but 3.8% more than in FY 2011.
The total NASA budget, and therefore its R&D budget, continues to be a matter of scientific and policy debate. Unlike most agencies and departments, NASA is likely to experience the largest budget cuts to its R&D efforts. The administration’s request for a slight increase in NASA’s overall FY 2012 budget actually included a slight decrease in R&D funding, primarily within aeronautics. The most significant congressional debate revolved around the future of the James Webb Space Telescope, the shifting of resources to a new Space Technology Directorate, and reprioritization (and budget changes) among other R&D areas. The final NASA FY 2012 R&D budget is set at $9.2 billion, which included significant support for the most highly debated investments. This level marks a decline of 6.6% from the FY 2011 level of $9.9 billion, and is the lowest level in at least five years.
National Science Foundation
Basic research funding, the mainstay of the NSF, has typically received strong bipartisan support. This support, while still evident, is faced with the realities of the current budgetary situation. The NSF has seen substantial increases in its R&D funding, with more than 20% growth from FY 2007 to FY 2011 due to both congressional and administration support through America COMPETES and other initiatives. For FY 2012, the administration requested an increase of roughly 15% over the previous year. The congressional compromise budget, while an increase, does not reach the administration’s request. The final NSF FY 2012 R&D budget reaches $5.8 billion, an increase of 6.7% over our final FY 2011 estimate of $5.4 billion.
Department of Agriculture
USDA R&D efforts are carried out primarily through the Agricultural Research Service and the National Institute of Food and Agriculture. Both of these were slated for slight increases in the administration’s FY 2012 request, among overall cuts and redirection of resources. The congressional conference budget reduced the R&D funding for both somewhat in a final USDA FY 2012 R&D funding of $2.0 billion, down 5.2% from our estimate of $2.1 billion in FY 2011.
Department of Commerce
The DOC FY 2012 R&D budget, like other budgets connected with America COMPETES, was likely to increase over final FY 2011 budgets, but not at the level requested by the administration to continue the “doubling” budget trajectory. For FY 2012, the administration’s request for DOC R&D, including the National Oceanic and Atmospheric Administration (NOAA) and the National Institute of Standards and Technology (NIST), was $1.7 billion. The final DOC FY 2012 R&D budget is set by the appropriation bill at $1.4 billion. Compared with FY 2011, this level includes a slight decrease in NOAA R&D funding and a significant increase in NIST R&D funding. The increase in NIST R&D funding stems from increases in the Scientific and Technical Research and Services budget and the mandatory Public Safety Innovation Fund. At this level, the DOC FY 2012 R&D budget constitutes an increase of 10.9% over our final FY 2011 estimate.
Department of Transportation
For FY 2012, the administration requested a DOT R&D budget of $1.2 billion, an increase of 15% over our final FY 2011 estimate. In general, congressional budget actions have complied with the administration’s request, including a likely 20% increase in the Federal Highway Administration’s R&D budget, though increases overall are much more constrained. The final DOT FY 2012 R&D budget is set at $1.1 billion, an increase of 1.3% over our FY 2011 estimate.