Executive Summary

ALLOCATING FEDERAL FUNDS FOR SCIENCE AND TECHNOLOGY

The United States benefits from a world-class science and engineering enterprise. This tremendously productive system has contributed importantly over the last half-century to economic growth, innovation, and advancing national goals in space exploration, defense, energy security, health, and the environment. Federal investment in science and technology has played a critical role in sustaining this system.

In Science, Technology, and the Federal Government: National Goals for a New Era, the National Academies' Committee on Science, Engineering, and Public Policy recommended two goals to guide federal investment in science and technology:

First, the United States should be among the world leaders in all major areas of science. Achieving this goal would allow this nation quickly to apply and extend advances in science wherever they occur.

Second, the United States should maintain clear leadership in some areas of science. The decision to select a field for leadership would be based on national objectives and other criteria external to the field of research.1

These goals provide the foundation upon which federal science and technology (FS&T) budgetary policy should be built and analyzed.

In Allocating Federal Funds for Science and Technology, the National Research Council recommended that the Executive Office of the President and Congress develop a more coherent budget process for determining the federal investment in programs that create new knowledge and technologies to meet these goals. The report recommended that the President should present annually a Federal Science and Technology (FS&T) Budget proposal that addresses both current national priorities and the investments necessary to sustain a world-class science and technology enterprise. 2

The U.S. Office of Management and Budget (OMB) has developed an FS &T Budget that is consistent with the NRC's concept and an effective approach for conceptualizing and tabulating federal investments in science and

1  

National Academy of Sciences, National Academy of Engineering, Institute of Medicine, Science, Technology, and the Federal Government: National Goals for a New Era, Washington, D.C.: National Academy Press, 1993.

2  

National Research Council, Allocating Federal Funds for Science and Technology, Washington, D.C.: National Academy Press, 1995, p. v.



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OBSERVATIONS ON THE PRESIDENT'S FISCAL YEAR 2003: FEDERAL SCIENCE AND TECHNOLOGY BUDGET Executive Summary ALLOCATING FEDERAL FUNDS FOR SCIENCE AND TECHNOLOGY The United States benefits from a world-class science and engineering enterprise. This tremendously productive system has contributed importantly over the last half-century to economic growth, innovation, and advancing national goals in space exploration, defense, energy security, health, and the environment. Federal investment in science and technology has played a critical role in sustaining this system. In Science, Technology, and the Federal Government: National Goals for a New Era, the National Academies' Committee on Science, Engineering, and Public Policy recommended two goals to guide federal investment in science and technology: First, the United States should be among the world leaders in all major areas of science. Achieving this goal would allow this nation quickly to apply and extend advances in science wherever they occur. Second, the United States should maintain clear leadership in some areas of science. The decision to select a field for leadership would be based on national objectives and other criteria external to the field of research.1 These goals provide the foundation upon which federal science and technology (FS&T) budgetary policy should be built and analyzed. In Allocating Federal Funds for Science and Technology, the National Research Council recommended that the Executive Office of the President and Congress develop a more coherent budget process for determining the federal investment in programs that create new knowledge and technologies to meet these goals. The report recommended that the President should present annually a Federal Science and Technology (FS&T) Budget proposal that addresses both current national priorities and the investments necessary to sustain a world-class science and technology enterprise. 2 The U.S. Office of Management and Budget (OMB) has developed an FS &T Budget that is consistent with the NRC's concept and an effective approach for conceptualizing and tabulating federal investments in science and 1   National Academy of Sciences, National Academy of Engineering, Institute of Medicine, Science, Technology, and the Federal Government: National Goals for a New Era, Washington, D.C.: National Academy Press, 1993. 2   National Research Council, Allocating Federal Funds for Science and Technology, Washington, D.C.: National Academy Press, 1995, p. v.

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OBSERVATIONS ON THE PRESIDENT'S FISCAL YEAR 2003: FEDERAL SCIENCE AND TECHNOLOGY BUDGET technology across the federal government. The institutionalization of the FS&T budget as a concept and a process is critically important to the analysis of short- and long-term investments in science and technology and, as discussed in our report on the President's FY 2002 FS&T proposal, the National Research Council endorses the approach to tabulating FS&T that OMB has developed. The list of programs in OMB's tabulation of the FS&T budget can be found in Table 1.3 THE PRESIDENT'S FY 2003 FEDERAL SCIENCE AND TECHNOLOGY BUDGET For fiscal year (FY) 2003, the Administration's budget proposal would increase the FS&T spending by 7.0 percent, from $52.3 billion to $56.0 billion, in constant FY 2002 dollars. The Administration would fund substantial increases for its high-priority initiatives, such as completing the doubling the budget of the National Institutes of Health (NIH). Under the Administration's proposal, 94 percent of the increase in FS&T spending, or $3.4 billion in constant FY 2002 dollars, would go to NIH. The administration would also focus a large part of its proposed increase on research that would help counter terrorist threats. Under its proposal, the Administration targets about $1.7 billion, or about 40 percent of the proposed NIH increase, to research at the NIH focusing on countering bioterrorism. Despite the large overall increase proposed for FS&T, there are two important concerns with the Administration's budget proposal that merit further consideration. First, the nation should identify national goals and agency missions and set funding priorities in line with those goals and missions, and the Administration has done so. However, the nation should also ensure the adequacy of funding across the science and engineering enterprise—as recommended by the Academies in Science, Technology, and the Federal Government: National Goals for a New Era—to facilitate world-class science and engineering across fields and to ensure preeminence in key disciplines. It is critically important to sustain world-class science and technology across fields so that we can generate and benefit from advances wherever they come from and meet challenges whenever they rise. Although we know that breakthroughs will occur as a result of our investment in research generally, we do not know which specific fields they will emerge from. For example, the results of research in quantum physics in the first half of the twentieth century later led to such diverse developments as transistors, with an array of electronic applications, and magnetic resonance imaging, with important medical applications, in the second half of the century. Although the Administration has established FS&T priorities for FY 2003, it has not addressed the issue of adequacy of funding across the FS&T portfolio. In constant dollars, the NIH budget would increase by 14.6 percent, or $3.4 billion, while all of the rest of the FS&T budget would increase by 0.8 percent, or just $221 million. Indeed, FS&T funding for most departments and agencies would decrease in constant dollars under the President' s budget proposal. Reductions in funding for certain agencies, such as the Departments of Energy and Defense, would negatively impact specific fields in the physical sciences and engineering that were already cut substantially in the 1990s. These trends affect the amount of research that can be conducted in the short run because of the reduced funding available. They therefore affect our ability to generate and capitalize on breakthroughs that might come from such fields. They also affect our nation's ability to maintain world-class scientific research across fields in the long run, because research and graduate education are closely linked and reductions in research funding have led to decreased enrollment of graduate students. FS&T investments sustain key university programs that not only contribute to the nation's research capability but also produce the scientists and engineers necessary to maintain the nation's scientific and technological strength, so key to economic competitiveness and national security. In addition to establishing current funding priorities, Congress and the President should consider the health of science and engineering across fields in its budget allocations. Funding for science and technology is an invest- 3   Much of FS&T, which totaled $52.3 billion in FY 2002, is counted in the R&D budget, which totaled $103.2 billion in FY 2002. Unlike the R&D budget, FS&T is comprised of identifiable line items in the budget and includes all costs, including staff salaries, associated with those programs. FS&T focuses more narrowly on research and also includes key science and engineering education programs at the National Science Foundation.

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OBSERVATIONS ON THE PRESIDENT'S FISCAL YEAR 2003: FEDERAL SCIENCE AND TECHNOLOGY BUDGET ment for the long term. This investment should ensure U.S. capacity across fields that allows us to capitalize on opportunities presented by research breakthroughs and also to respond to important challenges. International benchmarking—which examines funding and productivity for a field across countries—can provide a guide for evaluating whether the United States is making the kinds and levels of investments needed by field to sustain this capacity and our place among the world' s leaders in science and engineering. Second, the Administration proposes very little new funding for research carried out by agencies other than NIH that would also contribute to countering terrorism. In Making the Nation Safer, a report that was not yet available when the Administration prepared its budget proposal, the National Research Council outlines the potential impact of science and technology research in seven cross-cutting areas—systems analysis and modeling, integrated data management, sensors and sensor networks, robotic technologies, SCADA systems, biometrics, and human factors—on counterterrorism efforts. Importantly, the report argues “the realization of this potential will depend on a program of directed basic and applied research and will require an expansion and coordination of existing S&T programs and funding if the government's work is to produce effective tools for countering terrorism and ensuring homeland security.” (emphasis added)4 Moreover, the report notes, in order to realize the potential a “balance of investments is critical, across different time horizons as well as across numerous disciplines.”5 Although research on countering bioterrorism conducted by NIH will be productive, research carried out by other agencies, such as the Department of Defense, and drawing on a range of fields, can also contribute substantially to efforts to counter terrorist threats against the United States. The Administration and Congress should revisit the FS&T budget proposals in light of the recommendations of Making the Nation Safer. As shown in Figure 5 on page 20 of this report and Table 6 on page 31, Congress matched, and slightly exceeded, the Administration 's recommended increase for NIH in FY 2002. It also provided funding for science and technology that exceeded the Administration's request for almost every other agency. For example, the Administration proposed an increase in constant dollars of 0.8 percent for the National Science Foundation, but Congress later enacted an increase of 8.1 percent for NSF as a means for increasing funding for a broad range of science and engineering fields. Congress should again consider adequacy of funding for research across fields as it finalizes appropriations for FY 2003. ENSURING PERFORMANCE AND LEADERSHIP The Administration is taking important steps to ensure that federal resources for science and technology are being spent in a productive manner. First, all of the resources available for science and engineering research must be utilized to focus on the important national goals we face, including not only specific near-term objectives but also the nation's longer-term scientific and technological strength. The Administration has correctly identified the Congressional practice of earmarking funds for research at specific institutions as one that must be curtailed. Reducing earmarks for research is the responsibility of the research community and Congress. University leaders and individual researchers should follow principles such as those endorsed by the Association of American Universities.6 Second, federal funds invested in science and engineering programs must result in relevant, high-quality research. In developing and implementing its Research and Development Investment Criteria, OMB should seek to verify that the science and technology programs it funds are directly related to the advancement of important national goals and produce high-quality research. While collecting data from R&D program managers under GPRA and R&D evaluation processes is one method for gathering information to assess the performance of R&D programs, other means are also available. The Administration should consider methods such as external program reviews for examining the efforts of specific programs. In assessing the performance of federal programs, the 4   Ibid., pp. 332-334 5   Ibid. 6   Association of American Universities, “AAU Research Policy Issues: Strengthening the University-Federal Government Research Partnership,” March 2002, http://www.aau.edu/sheets/RschPolicy.html

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OBSERVATIONS ON THE PRESIDENT'S FISCAL YEAR 2003: FEDERAL SCIENCE AND TECHNOLOGY BUDGET Administration should also examine whether federal investments keep our nation among the world leaders in science and engineering research across fields. International benchmarking provides one method for analyzing the status of U.S. science in particular fields.7 The Administration should consider mechanisms such as this as it moves forward with analyses of the outcomes of federal science and technology programs. As the Administration extends the application of applied R&D criteria throughout the government for use in the development of the FY 2004 budget, it should be mindful of the difference between a focus on “performance” and a focus on “leadership.” Performance measures that focus too heavily on near-term results may provide strong incentives to focus on conservative goals. Performance measures that focus on results without assessing whether a program has adequate funding may penalize a program by decreasing its funding, when, in fact, the program requires increased funding. A focus on leadership, by contrast, would examine adequacy of funding, infrastructure, and human resources and whether programs promote risky research on the frontiers of knowledge. The goal of federal funding for research is to maintain a science and engineering enterprise that is world-class across fields and preeminent in fields relevant to national priorities. 7   National Academy of Sciences, National Academy of Engineering, Institute of Medicine, Experiments in International Benchmarking of U.S. Research Fields , Washington, D.C.: National Academy Press, 2000.