Federal R&D Funding Under a Continuing Resolution

Order Code RS22523

Updated March 13, 2007

Federal R&D Funding Under a Continuing

Resolution

Michael E. Davey

Specialist in Science and Technology

Resources, Science, and Industry Division

Summary

On February 15, 2007 President Bush signed into law P.L. 110-5 (H.J.Res 20),

which provides funding for the nine outstanding regular appropriations bills through

September 30, 2007.The 109th Congress passed two appropriations bills, the Department

of Defense (P.L. 109-289, H.Rept. 109-676) and the Department of Homeland Security

(P.L. 109-295, H.Rept. 109-699). P.L. 110-5 will fund most agencies at FY2006 levels

through September 30, 2007. However, P.L. 110-5 contains some exceptions to those

guidelines, including the centerpiece of the President’s proposed FY2007 R&D budget,

the American Competitiveness Initiative (ACI). Agencies are required to report their

estimated FY2007 R&D funding levels to Congress by March 15, 2007.

The Bush Administration had requested $137.7 billion in federal research and

development (R&D) funding for FY2007. This sum represented a 2.4% increase over the

estimated $134.5 billion that was approved in FY2006. As in the recent past, the FY2007

increase over the FY2006 estimated funding levels was due to significant funding

increases for the Department of Defense (DOD) and the National Aeronautics and Space

Administration’s (NASA’s) space vehicles development program (see Table 1, below).

The centerpiece of the President’s proposed FY2007 R&D budget was the National

Research Council’s (NRC) report entitled Rising Above the Gathering Storm and

Energizing and Employing America for a Brighter Future. The report expressed growing

concerns about America’s ability to compete in the technological global market place.1

In response to the NRC report, the President requested the American Competitiveness

Initiative (ACI). As proposed, over the next 10 years, this $136 billion initiative would

commit $50 billion for research, science education, and the modernization of research

infrastructure. The remaining $86 billion would finance a revised permanent research and

1

Rising Above The Gathering Storm and Energizing and Employing America for a Brighter

Economic Future, The National Academy of Sciences, the National Academy of Engineering,

and the Institute of Medicine, The National Academies, 500 Fifth Street, NW, Washington, DC

20001, 2005.

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experimentation (R&E) tax incentive over the next 10 years. Congress approved a

temporary research and experimental (R&E) tax credit that will expire on December 31,

2007.

The Current Status of FY2007 R&D Appropriations

The 109th Congress passed two appropriations bills, the Department of Defense

(P.L. 109-289, H.Rept. 109-289) and the Department of Homeland Security (P.L. 109295, H.Rept. 109-699). On February 15, 2007 President Bush signed into law P.L. 110-5,

(H.J.Res. 20 ) which provides funding for the nine outstanding regular appropriations bills

through September 30, 2007. However, P. L.-110-5 contains some exceptions to those

guidelines, including the centerpiece of the President’s proposed FY2007 R&D budget,

the American Competitiveness Initiative (ACI).

Total federal R&D could reach an estimated $140 billion for FY2007. Despite the

ACI, most of this increase can be attributed to large funding increases for development

spending in defense and for the National Aeronautics and Space Administration. CRS

estimates that total federal basic research funding could decline in FY2007. Five agencies

account for 90% of all federal basic research expenditures. Total federal research funding

(the sum of basic and applied research) is also projected to decline in FY2007.

American Competitiveness Initiative (ACI). As part of the $50 billion for

research initiatives, the President called for doubling the federal R&D funding over 10

years. This increase would include the physical sciences and engineering research in three

agencies: the National Science Foundation (NSF), the Department of Energy’s (DOE’s)

Office of Science, and the National Institute of Standards and Technology (NIST). Based

on P. L. 110-5, H.J.Res. 20, both the House and Senate FY2007 appropriations actions

would partially fund the President’s ACI request. Based on House and Senate actions

DOE's Office Science would would receive $200 million of ACI funding, while NSF is

expected to receive an estimated $217million, and NIST an estimated $37 million, of ACI

funding in FY2007.

Homeland Security. The Department of Homeland Security (DHS) requested

$1.552 billion for R&D in FY2007, an increase of 4.5% from FY2006. This total

included $1.002 billion for the Directorate of Science and Technology, $536 million for

the Domestic Nuclear Detection Office (DNDO), and $14 million for Research,

Development, Test, and Evaluation (RDT&E) in the U.S. Coast Guard. The request for

DNDO was a 70% increase. The request for the S&T Directorate was a 13% decrease.

The House provided $956 million for the Directorate of Science and Technology; $500

million for DNDO; and $14 million for Coast Guard RDT&E. The Senate provided $818

million for the S&T Directorate (less a rescission of $200 million in unobligated prioryear funds); $442 million for DNDO; $18 million for Coast Guard RDT&E; and $92

million for R&D in the Transportation Security Administration (transferred from S&T).

The final bill provided $973 million for S&T (less $125 million in rescinded prior-year

funds); $481 million for DNDO, and $17 million for Coast Guard RDT&E. The final

total of $1.371 billion (excluding the rescission of unobligated funds) was an overall 9%

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reduction from FY2006, made up of a 16% decrease for S&T, a 53% increase for DNDO,

and a 6% decrease for Coast Guard RDT&E.2 (See P.L. 109-295, H.Rept. 109-699)

Labor/HHS/ED. The primary R&D agency under this appropriations bill is the

National Institutes of Health (NIH). For the second fiscal year in a row, NIH is likely to

see its budget decline in real dollars. The President requested a program level budget of

$28.487 billion for NIH for FY2007, essentially equal to the FY2006 final budget and

$66.8 million (0.2%) lower than the FY2005 level of $28.553 billion. The FY2006

amount was the first decrease in NIH’s appropriation since 1970. (NIH lost an additional

$19.5 million in FY2006 funds in June 2006 when the HHS Secretary exercised his

transfer authority to give the Centers for Medicare and Medicaid a total of $40 million

from other HHS discretionary accounts, dropping the NIH program level to $28.468

billion.) At the end of the 109th Congress, the House and Senate agreed on the first NIH

reauthorization statute enacted since 1993, the NIH Reform Act of 2006 (P.L. 109-482).

The law made managerial and organizational changes in NIH, focusing on enhancing the

authority and tools for the NIH Director to do strategic planning, especially to facilitate

and fund cross-institute research initiatives. H.J.Res. 20 would fund NIH at $28.9 billion,

a proposed increase of $619.5 million. This would allow the agency to fund an additional

500 research grants and 1,500 first time investigators.

Science-State-Justice-Commerce. The House and Senate appropriations

committees oversee the activities of four major R&D agencies. They include NSF and

NIST (who are participating in the ACI), NASA, and the National Oceanic and

Atmospheric Administration (NOAA) in the Department of Commerce. The Housepassed bill H.R. 5672 would cut NOAA funding from $610 million in FY2006, to $510

million in FY2007. Concomitantly, the Senate Appropriations Committee reported H.R.

5672 (amended in the nature of a substitute), which included a recommendation of $779

million for NOAA R&D funding in FY2007. The Administration’s FY2007 budget

includes $581.3 million for NIST, almost 22.7% below the current fiscal year. Support

for internal R&D activities under the Scientific and Technology Research and Services

(STRS) account would increase 18.3% to $467 million, most of which is related to the

ACI. The House-passed FY2007 appropriations bill, H.R. 5672, provides NIST with

$627 million, a decrease of almost 16.6% from the current fiscal year. The version of

H.R. 5672 reported from the Senate Committee on Appropriations would fund NIST at

$764 million, 1.6% above the current fiscal year. For the first time, both the House and

Senate bills would not provide any funding for NIST’s Advanced Technology Program.

Under H.J.Res. 20, NIST would receive an additional $50 million for research in its

laboratories.

Other Budget-related Issues. The absence of an early House and Senate

agreement on the FY2007 Budget Resolution (S.Con.Res. 83) and (H.Con.Res. 376)

played a major role in delaying the passage of the remaining FY2007 appropriations bills.

How the House and Senate resolve their differences regarding R&D funding remains to

be seen. One approach that legislators have traditionally used is for the House and Senate

to split the difference in their funding proposals. However, as indicated in Table 1 below,

2

DNDO was funded within the S&T Directorate in FY2006. The percentage increases given here

for DNDO are relative to its FY2006 funding within S&T. The percentage decreases for S&T are

relative to its FY2006 funding, exclusive of DNDO.

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this approach would result in some agencies either receiving no increases or having

significant funding reductions in FY2007.

According to an article in CQ, 82 Republican and Democratic House Members have

requested that NSF receive the $6 billion the President had proposed for FY2007. In

addition, Senators Lamar Alexander and Jeff Bingaman were circulating a letter

containing the signatures of 43 Senators in both parties calling for the substantial

increases in the CR for the Office of Science in DOE.3

In an article in the Washington Post, Representative David Obey, incoming

Chairman of the House Appropriations Committee, and Senator Robert Byrd, incoming

Chairman of the Senate Appropriations Committee, indicated that they intend to extend

the current CR until end of the FY2007 fiscal year. If Congress approves extending the

current CR to September 30, 2007, most agencies would see their FY2007 R&D budgets

remain at FY2006 funding levels. Further, because agencies are usually not allowed to

initiate new programs under a CR, the President’s ACI may not be implemented in

FY2007. 4

Limitations on R&D Activities. The current CR allows agencies without enacted

FY2007 appropriations to fund existing R&D programs and activities at FY2006 funding

levels. However, if Congress approves a year-long continuing resolution, no new

initiatives, including the President’s ACI proposal, could be funded in FY2007. If

Congress approves a year-long CR, funding for basic and applied research is estimated

to decline 2% in real dollars. Further, based on current Congressional actions, such

agencies as the Department of Agriculture, the Department of Energy, and NOAA would

see their R&D budgets decline significantly in FY2007. The CR would also cancel most

of the congressionally designated, performer-specific R&D projects (traditionally known

as earmarks) that were pending in the unfinished 2007 appropriations bills.

As part of H.J.Res. 20, NSF’s research account would increase $335 million to $4.7

billion. According to NSF this increase is a down-payment towards enhancing U. S.

global competitiveness by investing in basic science research. However, according to

NSF, the loss of the ACI will result in the reduction of 600 new research grants. Also,

NSF notes, assuming research proposal pressure remains stable at 2006 levels, there

would be a decline of successful research funding rates from 21% in 2006 to an estimated

18% in 2007. NSF also indicated that funding for the EPSCoR program would be frozen,

rather than allowed to increase as recommended by both the full House and Senate

appropriations committees. In addition, the CR would result in the loss of 40 planned

Graduate Research Fellowships occurring at such a time, according to NSF, when many

experts are calling for significant increases in this program. According to NSF, without

these fellowships, these best and brightest students from all fields of science and

engineering may be forced to seek other funding or apply their talents to non-research

fields.

3

Liriel Higa and Alan K. Ota, C. Q. Today, Requests for Extra Money in “CR” Multiply,

January 25, 2007.

4

Shailagh Murray and Jonathan Weisman, “Democrats Freeze Earmarks for Now,” The

Washington Post, December 12, 2006, p. A3.

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According to DOE, H. Jes. 20, includes a $200 million increase for the Office of

Science, as part of its FY2007 contribution to the ACI.

The Ratio of Civilian and Defense R&D. When President Bush took office in

2001, the ratio of defense to civilian R&D was 52% to 48%. If the FY2007 House passed

appropriations legislation becomes law, defense related R&D would reach $81.2 billion,

or 58% of federal R&D, while civilian R&D would decline to $58.8 billion, or to 42% of

total federal R&D spending.5 This represents the largest discrepancy between defense and

civilian R&D spending since the early 1990s. Some argue that defense R&D has little

impact on the discovery of new knowledge and the transfer of technological innovation

to the commercial market place. This issue was raised during the Reagan Administration

when defense research reached 68% of total federal R&D spending in the late 1980s. One

of the major recommendations in the NRC’s report, Rising Above the Gathering Storm,

calls for an increase in federal investment in long-term basic research, ideally through

reallocation of existing funds, but also if necessary via new funds by consenting to an

increase of 10% annually over the next seven years. The report noted that special

attention should go to the physical sciences, engineering, mathematics, and information

sciences and to DOD basic research funding. According to the report, this special

attention does not mean that there should be a disinvestment in such important fields as

the life sciences or the social sciences. Instead, the report contends a balanced research

portfolio in all fields of science and engineering research is critical to U.S. prosperity.6

5

This CRS estimate is based on Defense R&D as the sum of DOD’s RDT&E programs, the

Department of Energy’s defense related R&D activities, and an estimated $400 million in

homeland security R&D.

6

Rising Above The Gathering Storm and Energizing and Employing America for a Brighter

Economic Future, The National Academy of Sciences, the National Academy of Engineering,

and the Institute of Medicine, The National Academies, 500 Fifth Street, NW Washington, DC

20001, 2005, p.5.

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Table 1. Estimated Federal R&D Appropriations

in the 109th Congress

(millions $)

Agency

FY2006

Est.

FY2007

Request

FY2007

House

FY2007

Senate

Approp.

2007 Est.

Department of Defense

71,152

73,157

75,337

72,998

75,435a

Homeland Security

1,505

1,552

1,470

1,370

1,371b

Nat. Institutes of Health

28,468

28,487

28,489

28,688c

NASA

11,475

12,336

12,260

12,300d

Nat. Science Foundation

5,581

6,020

6,020

5,992d

NIST

552

581

627

764d

NOAA

610

533

510

779d

Dept. of Interior

634

598

630

643e

EPA

730

788

808

793e

Dept. Energy

8,848

9,153

9,394

9,891f

Dept. of Transportation

752

581

627

764g

Dept. of Agriculture

2451

2,108

2,388

2,433h

Other

1,840

1,831

1,855

1,865i

Total

134,515

137,770

140,415

139,280

a. P.L. 109-289, H.Rept. 109-676.

b. P.L. 109-295, H.Rept. 109-699.

c. Labor-HHS-Education, H.Rept. 109- 485; S.Rept. 109-287.

d. Science-State-Justice-Commerce, H.Rept. 109-520; S. Commerce-Justice-Science, S.Rept. 109-280.

e. Interior-Environment, H.Rept. 109-465; S.Rept. 109-275.

f. Energy-Water, H.Rept. 109-474; S.Rept. 109-274.

g. Transportation-Treasury-HUD-Judiciary-D.C., H.Rept. 109-495; S.Rept. 109-293.

h. Agriculture, H.Rept. 109-463, Part 1&2; S.Rept. 109-266.

i. “Other” includes Education, Veterans, Agency for International Development, Nuclear Regulatory

Commission, Smithsonian, Justice, Treasury, TVA, and the U.S. Postal Service.