Federal R&D Funding Under a Continuing Resolution

CRS Report for Congress
Federal R&D Funding Under a Continuing
Resolution
Michael E. Davey
Specialist in Science and Technology
Resources, Science, and Industry Division
Summary
On September 30, 2004 President Bush signed a continuing resolution, or CR (P.L.
108-309, H.J.Res. 107) which essentially maintains spending at FY2004 levels for those
agencies lacking enacted FY2005 appropriations bills, through November 20, 2004.
The House has passed 12 of its 13 appropriations bills while the Senate has passed six
appropriations bills. Four of these bills have been signed into law. The FY2005 CR
(H.J.Res. 107) includes the 9 appropriation bills that have not been passed by Congress.
Based on the bills as passed or reported by the House, CRS estimates that the House has
approved a record high of $131.5 billion for federal R&D for FY2005. This report will
be updated as events warrant.
Introduction
On September 30, 2004 President Bush signed a continuing resolution, or CR (P.L.
108-309, H.J.Res. 107), which essentially maintains spending at FY2004 levels for those
agencies lacking enacted FY2005 appropriations bills through November 20, 2004.
Congress reconvenes on November 16, 2004 to complete work on the remaining 9
appropriation bills that have not been enacted into law. The four bills enacted into law are
the Department of Defense ( DOD), the Department of Homeland Security (DHS), the
District of Columbia, and Military Construction, (the last two bills contain no R&D
funding).
The Bush Administration requested $131.9 billion in federal research and
development (R&D) funding for FY2005. This is $5.7 billion above the estimated $126.2
billion that was appropriated for federal R&D in FY2004. The President’s R&D request
mirrors recent proposals for large increases in defense and homeland security R&D, while
the remaining agencies would receive modest increases or reductions in their respective
research programs. All FY2004 civilian R&D funding figures include required
rescissions.

Congressional Research Service ˜ The Library of Congress

The Current Status of FY2005 R&D Appropriations
The House of Representatives has approved all of its appropriation bills except for
VA/HUD/Independent Agencies which has been reported by the House and Senate.¹ The
Senate has passed six of its appropriations bills. CRS estimates that the House approved
an estimated record high $131.5 billion for federal R&D, $365 million below the
President’s request. Nevertheless, this estimated amount is $5.325 billion, or 4.2% above
FY2004 R&D levels. Given the limited number of appropriations bills passed by the full
Senate, CRS is unable to estimate total Senate FY2005 R&D spending levels. (See table
below). All of the remaining R&D programs must maintain funding at FY2004 enacted
levels until Congress approves their respective FY2005 appropriations bills.
Estimated Federal R&D Appropriations
in the 108^th Congress FY2005
($ millions)
^A^g^en^cy^FY²⁰⁰⁴^FY²⁰⁰⁵^FY^{2005 Hou}^s^e^F^Y^{2005 S}^eⁿ^a^te
^Est^.^Request
^D^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^e^$64,693^$67,773^$69,853^a^$69,853^a
^H^o^m^e^l^aⁿ^d^S^ecu^ri^t^y^1,038^1,132^1,311^b^1,311^b
^{Nat. In}^s^titu^tes^of^Health^27,892^{28, 724}^28,719^c^29,037^c
^N^A^S^A^10,972^11,405^10,600^d^11,000^d
^N^a^t^.^S^cⁱ^eⁿ^{ce F}^o^uⁿ^d^atⁱ^oⁿ⁵^,578^5,745^5,467^d^5,745^d
^EPA⁷⁸¹⁶⁸⁹⁷²⁹^d⁷⁵⁸^d
^N^I^S^T⁶¹⁰⁵²¹⁵²⁵^e⁷⁸⁵^e
^N^O^A^A⁶³²⁶¹¹⁵⁴⁵^e⁷⁴⁸^e
^D^e^pt^{. of}^En^erg^y^8,677^8,482^8,625^f^f
^D^e^pt^{. of}^T^r^an^s^port^a^tⁱ^oⁿ⁷⁰¹⁷⁴⁹⁶⁶⁹^g⁷¹⁹^g
^D^e^pt^{. of}^In^t^e^ri^or⁶⁷⁵⁶⁴⁸⁷⁰¹^h⁶⁶⁶^h
^D^e^pt^{. of}^A^g^ri^cu^l^t^u^re^2,500^2,435^2,600ⁱ^2,540ⁱ
^Oth^e^r^j^1,427^1,825¹⁸⁴²
^T^o^t^a^l^126,176^131,866^131,501
^{a. P.L}^.^108-^{287, H}^.^R^e^pt^{. 108-}⁶²²
^{b. P.L}^.^108-^{334, H}^.^R^e^pt^{. 108-}⁷⁷⁴
^{c. L}^a^bor/^H^H^S^/^E^D^,^H^.^R^.^{5006, H}^.^R^e^pt^{. 108-}^636;^S^.^{2810, S}^.^R^e^pt^{. 108-}³⁴⁵
^{d. VA}^/HUD/an^{d In}^depen^d^en^{t A}^g^en^cies^{, H.R}^.^{4614, H.R}^e^{pt. 108-}^674;^S^.^{2825, S}^.^R^e^{pt. 108-}³⁵³
^{e. C}^o^m^m^e^{rce, Ju}^s^tⁱ^{ce, S}^t^at^{e, H}^.^R^.^{4754, H}^.^R^e^pt^{. 108-}^576;^S^.^{2809, S}^.^R^e^pt^{. 108-}³⁴⁴
^f^.^En^erg^y^{, H}^.^R^.^{4614, H}^.^R^e^pt^{. 108-}^584;^N^o^S^eⁿ^a^t^e^bi^l^l
^g^.^T^r^an^s^port^a^tⁱ^oⁿ^,^H^.^R^.^{5025, H}^.^R^e^pt^{. 108-}^671;^S^.^{2806, S}^.^R^e^pt^{. 108-}³⁴²
^h^.^In^t^e^ri^{or, H}^.^R^.^4568,H^.^R^e^pt^{. 108-}^543;^S^.^{2804, S}^.^R^e^pt^{. 108-}³⁴¹
ⁱ^.^A^g^ri^cu^l^t^u^{re, H}^.^R^.^{4766, H}^.^R^e^pt^{. 108-}^584;^S^.^{2803, S}^.^R^e^pt^{. 108-}³⁴⁰
^J^.^{” Oth}^e^{r” in}^clu^d^es^Edu^cation^,^Veteran^s^{, A}^g^en^cy^f^o^{r In}^tern^ation^a^{l Dev}^e^lopm^en^{t, Nu}^{clear R}^e^g^u^l^atory
^C^o^m^mⁱ^s^sⁱ^on^{, Sm}^ith^s^oⁿⁱ^an^{, Dept. of}^J^u^s^{tice, Dept. T}^r^eas^u^r^y^,^T^V^A^,^an^{d U.S. P}^o^s^t^{al Serv}^ice
Defense. The projected growth for federal R&D in FY2005 can be attributed to
Congress approving significant increases for defense (as well as homeland security) R&D
programs. Congress approved a record $69.853 billion for DOD’s Research,

¹ The House and Senate Appropriations Committees have reported their respective
VA/HUD/Independent Agencies bills. (H.R. 5041, H.Rept. 108-674, and S. 2825, S.Rept. 108-

353)

Development, Test and Evaluation (RDT&E) programs, a $5.2 billion increase over
FY2004 estimated levels (P.L. 108-287). The President’s proposed increase for DOD
focused on development activities. The President’s request for DOD had included a 5%
reduction for DOD’s basic research programs and a 12% reduction for its applied research
programs. Congress approved a 7.8% increase for basic research and an 11.9% increase
for applied research, over FY2004 funding levels.²
Homeland Security. Congress approved a large increase for DHS R&D
programs. While the President had requested a 15.6% increase for R&D ($1.2 billion),
Congress approved a 26% increase over FY2004 to $1.311 billion for R&D. Furthermore,
while the President had recommended $30 million for university R&D activities,
Congress approved $70 million, matching FY2004 funding levels. Congress rejected the
Administration’s request to transfer the Coast Guard’s R&D programs ($18.5 million) to
the S&T Directorate in DHS. Finally, the DHS bill passed by Congress contains a
provision that prohibits the department from contracting with U.S. companies that have
incorporated overseas in order to avoid paying federal income taxes.³
Labor/HHS/ED. The primary R&D agency under this appropriations bill is the
National Institutes of Health (NIH). Both the House and Senate have approved increased
for NIH. The NIH bill passed by House (H.R. 5006) essentially matched the President’s
proposed 3% increase or $28.607 billion request for NIH, while the Senate Appropriations
Committee reported bill (S. 2810) approved $29.037 billion, a 4.2% increase over
FY2004.The Senate committee report, pointing to the expected 3.5% rise in the
biomedical inflation index, provides full funding for commitments to existing grantees
and increases the average cost of future competing grants.
VA/HUD/Independent Agencies. The primary R&D mission agencies under this
appropriation bill are the National Aeronautics and Space Administration (NASA) and
the National Science Foundation’s (NSF). The House Committee reported bill (H.R.
5041) eliminates most of NASA’s R&D associated with new projects that are part of the
President’s space exploration initiative. Based on current House actions, funding for
NASA would decline 7% below FY2004 funding levels. The bill reported by the Senate
Appropriations Committee (S. 2825) would restore most of the House cuts by labeling
$800 million as emergency spending for the new space exploration initiative. However
the Senate bill includes a provision that directs the National Academies’ Space Studies
Board to conduct a review of the science that NASA is proposing to undertake within this
new initiative. The House reported bill would cut NSF’s FY2005 proposed budget by
$278 million, 2% below FY2004 levels. The Senate Appropriations Committee reported
bill (S. 2825) matches the President’s proposed 2.9% increase for NSF. The Senate bill
includes $4.402.3 billion for research and related activities account, $50 million below
the request, but $251 million, or 6% above the House approved funding level. The Senate
bill also rejects the Administration’s proposed cuts for NSF’s Education and Human

² For additional information on congressional action on the Administration’s proposed FY2005
R&D Budget see, CRS Issue Brief IB10129, Federal Research and Development Funding:
FY2005, Michael E. Davey, Coordinator.
³ Homeland Security, Making Appropriations for the Department of Homeland Security for the
Fiscal year Ending September 30, 2005, and for Other Purposes. Conference Report, H.Rept.

108-774, p. 24.

Resources Directorate recommending $929.2 million, or $157.8, million above the
request. Both the House and Senate bills contain cuts for EPA’s research programs.
Commerce/Justice/State. The primary R&D mission agencies under this
appropriation bill are the National Institute of Standards and Technology (NIST), and the
National Oceanic and Atmospheric Administration (NOAA). The House passed
appropriations bill (H.R. 4754) would cut NIST research programs by 14%, including
ending federal support for the Advanced Technology Program (ATP). The House
approved $106 million for the Manufacturing Extension Program (MEP). The Senate
Appropriations Committee reported bill (S. 2809) rejects the House’s cuts by
recommending $784.9 million for NIST in FY2005. The majority of this increase can be
attributed to the Senate Committee funding for the ATP at $203 million for FY2005. The
Committee also approved $112 million for MEP. The House passed NOAA
appropriations bill would provide about $545 million for R&D, about $87 million below
FY2004 appropriations. The Senate Appropriations Committee reported bill
recommended $748 million for NOAA R&D, an 18% increase over FY2004.
Energy and Water. The House has approved an Appropriations bill (H.R. 4614)
that cuts FY2005 funding $42 million below FY2004 levels for DOE. However the House
bill increases funding for DOE’s basic science programs by $100 million, or 2.9% above
FY2004 estimated levels. The Senate has not reported a bill reportedly due to a continuing
dispute over funding for Yucca Mountain a proposed site to store nuclear waste,
according to Congress Daily.⁴
FY2005 Budgetary Situation. The inability of House and Senate to reach an
early agreement on the FY2005 Budget Resolution (S.Con.Res. 95) has played a major
role in delaying the passage of the remaining FY2005 appropriation bills. The House
Appropriations Committee reached an agreement on its 13 appropriations subcommittee
allocations in May. However, the Senate did not reach an agreement on its subcommittee
allocations until September, 2004. How the House and Senate resolve their differences
regarding R&D funding remains to be seen. One approach that legislators have
traditionally used would be for the House and Senate agreeing to split the difference in
their funding proposals. As indicated in the table, this approach would result in a number
of civilian R&D agencies receiving no increases, or actual declines below FY2004
funding levels. To address these concerns, the Senate approved an additional $8.1 billion⁵
in spending for three FY2005 appropriations bills. They include $3.6 billion for health
and education in Labor/HHS, $2 billion for NASA R&D and veterans health in the
VA/HUD bill, and additional $2.5 billion for the Transportation-Treasury appropriation
bill.⁶ Nevertheless given the number of appropriations bills that have not been passed,
and the House’s apparent insistence on maintaining discretionary spending at $821 billion

⁴ Tough Decisions on Omnibus to be Made After the Election, CQ Today, October 25, 2004.
Joseph J. Schatz, CQ Staff.
⁵ Thorny Issues, Multibillion-Dollar Gap Divide Chambers’ Fiscal Spending Bills, CQ Today,
October 22, 2004. Joseph J. Schatz, CQ Staff.
⁶ The Senate designated $2 billion for veterans health care and $800 million for NASA
as emergency spending, and secured another $1 billion by directing the federal public
housing authorities to begin the FY2005 fiscal year on January 1, 2005.

for FY2005, the House and Senate may have a difficult time in resolving their differences.
If Congress adopts the President’s FY2005 requested budget for civilian R&D, funding
levels for NASA, NSF, and NIH would increase, while most of the remaining civilian
agencies would see their R&D budgets decline below FY2004 levels.
The President reportedly has told congressional Republicans to finish the remaining

9 appropriations bills quickly, in the lame-duck session beginning on November 16.

Otherwise, according to CQ, the President is threatening a year-long continuing
resolution that would fund the remaining bills, that are not completed by Thanksgiving
when the special session is scheduled to end, at FY2004 levels. Some Senate aides have
stated that the President wants higher discretionary spending levels than approved by
Congress, including the restoration of House NASA cuts associated with his Moon-Mars
initiative. Consequently, some speculate that Congress is likely to approve higher
spending caps, along with across-the-board cuts, for civilian discretionary spending, that
will help to bring total discretionary spending closer to $821 billion.⁷
Limitations on R&D Activities. The current CR allows agencies, without
enacted FY2005 appropriations, to fund existing R&D programs and activities at FY2004
funding levels. However, the resolution prohibits agencies from funding new research
programs or new initiatives until their FY2005 appropriations bills are passed by
Congress. In general, under the continuing resolution, no new projects or initiatives that
had been planned for FY2005 can be funded. Further, some agencies’ representatives are
concerned that if the proposed 3.5% federal pay raise goes through, and R&D funding
does not increase, it will have a big impact on the agencies’ ability to fund additional⁸
personnel and needed infrastructure, including information technology infrastructure.
The CR has forced some agencies to put off construction of new facilities or stop
construction until their respective FY2005 appropriations bills are passed. Construction
has moved forward with those programs that have been fully funded, but not others. For
example, a representative from NSF stated that to keep major research and facilities
construction on track, NSF might have to request a formal reprogramming to cover
increasing costs for some ongoing projects.⁹ Further, while most civilian R&D agencies
will continue their request for research proposal activities, many will have to delay or
restrict the number of awards given until they know the fate of their FY2005 budget
request. Representatives from NIST have indicated that they have enough FY2004
funding to maintain the ATP program until late November. If Congress does not provide
FY2005 funding for ATP by the end of December, NIST would have to initiate
procedures for terminating the program.¹⁰ For some agencies, like the National Science
Foundation (NSF), there has been some concern that budget uncertainties might affect its
ability to recruit top graduate students for their fellowship programs. If the CR is extended
beyond November 20, 2004 some students might delay graduate studies or take jobs in

⁷ Speedy Wrap up Likely for Remaining Spending Bills, CQ TODAY, Joseph J. Schatz,
November, 5, 2004
⁸ Based on phone discussions with a DOE official, October 18, 2004.
⁹ Based on phone discussions with a NSF officials, October 14, 2004.
¹⁰ Based on phone discussions with NIST Congressional Affairs officials, October 15, 2004.

the private sector. This could force some universities to initiate new competitions for
graduate students.
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 House FY2005 actions
hold, CRS estimates that defense related R&D would reach $74.2 billion, or 58% of
federal R&D spending, while civilian R&D would decline to $55.2 billion, or to 42% of
total federal R&D spending.¹¹ This represents the first decline in federal civilian R&D
funding, since 1995.There is some concern that the Bush Administration may be
increasing defense R&D at the expense of civilian R&D, primarily because most of the
increase in defense R&D is for the development of weapons systems that arguably have
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. Language in the Senate FY2005 VA/HUD/Independent Agencies report (S.
2825, S.Rept. 108-353) describes a crucial role federal civilian research funding plays in
“productivity growth, powered by new knowledge and technological innovation, makes
the economic benefits of a comprehensive, fundamental research and education enterprise
abundantly clear.” According to the committee, NSF is at the leading edge of research and
discoveries that “will create jobs and technologies of the future.”¹² The Committee report
also states that it continues to support the doubling of NSF funding, over a five year
period, as called for in NSF’s Authorization Act of FY2002 (P.L.107-368). If the
President’s request had reflected funding levels contained in the FY2002 Authorization
Act, NSF’s Research and Related Activities account (the account that funds NSF’s basic
research programs) would be $5.445 billion, or $1 billion more than the sum
recommended by House and Senate Appropriations for FY2005. Efforts to increase
federal civilian R&D spending may be affected by fiscal conservatives who support
reducing the federal deficit.

¹¹ Defense R&D is the sum of DOD’s RDT&E programs, the Department of Energy’s defense
related R&D activities, and an estimated $300 million in homeland security R&D.
¹² Department of Veterans Affairs and House and Urban Development, and Independent Agencies
Appropriations Bill 2005. S.Rept. 108-353, p. 135.