State Agencies’ R&D Increased 1% in FY 2020; Health-Related R&D Declined for the Second Year in a Row

Of the $2.4 billion in state government agency R&D expenditures in FY 2020, 75% came from state and other nonfederal sources; the remainder came from federal sources (table 1). Although state governments are both funders and performers of R&D, the majority (72%) of their expenditures support extramural R&D (i.e., performers other than state agencies). Higher education institutions were the primary recipients of these expenditures, receiving 54% of all extramural funding, followed by companies and individuals (26%). Intramural performers of R&D, the state agencies themselves, totaled $693 million in FY 2020, an increase of 5% from $658 million in FY 2019.

Expenditures for R&D plant (construction projects, major building renovations, major equipment purchases, and land and building acquisitions intended primarily for R&D use) totaled close to $10 million in FY 2020, a 5% decrease from FY 2019.^{​Expenditures for R&D do not include expenditures for R&D plant because the two are separate funding activities.}

Although all states had government agencies with R&D expenditures in FY 2020, the amounts are often concentrated in a handful of states. Specifically, five states (California, New York, Texas, Florida, and Pennsylvania) accounted for 61% of all state government R&D expenditures in FY 2020 (figure 1). Expenditures also vary by state between intramural and extramural R&D. For example, 61% ($279 million) of New York’s R&D expenditures are directed toward intramural performance, whereas only 15% ($81 million) of California’s R&D is directed toward intramural performers.

Five states accounted for 67% of the $693 million in total expenditures for intramural R&D performed by state agencies in FY 2020: New York ($279 million), California ($81 million), Florida ($52 million), South Carolina ($28 million), and Connecticut ($26 million). In FY 2020, 43% ($297 million) of all state agency intramural R&D performance was supported by federal funds.^{​Data on intramural R&D by source of funds are available in data table 5, available at https://ncses.nsf.gov/pubs/nsf21301#data-tables.}

State agency intramural performance is heavily organized around applied research, with 76% ($523 million) of all intramural expenditures classified as applied, while basic research and experimental development constitute 19% and 6%, respectively.^{​Detailed data on intramural R&D by type are available in data table 7, available at https://ncses.nsf.gov/pubs/nsf21301#data-tables.}

The state governments of California, Texas, New York, Florida, and Pennsylvania accounted for 60% of the total $1.8 billion in FY 2020 state government expenditures for extramural R&D performance. However, states varied in how they distributed extramural R&D. For example, Texas state agencies directed 70% of their extramural funding for R&D toward academic institutions ($142 million), compared with 15% ($29 million) to companies and individuals. By comparison, California’s distribution of extramural R&D funding is relatively balanced across the three sectors, with 32% ($144 million) directed toward academic institutions, 46% ($209 million) toward companies and individuals, and 22% ($100 million) toward other performers.

State government R&D expenditures from federal funds increased 8% from $561 million in FY 2019 to nearly $608 million in FY 2020. At the same time, funding from state governments’ own funds for R&D declined nearly 1% from $1.9 billion to $1.8 billion (table 1). Thus, FY 2020 state government R&D expenditures were buoyed by an increase in federal funds to state governments for R&D, preventing a decline in total state R&D investment.

The U.S. Department of Transportation was the single largest source of federal funds, with 31% ($188 million) of all federal funds to state government for R&D, followed by the Department of Health and Human Services, with 30% ($180 million), and the Department of the Interior, with 18% ($107 million) (figure 2). The Department of Agriculture, Department of Energy, Department of Commerce, and Department of Defense contributed 5%, 4%, 3%, and 2%, respectively. All other federal departments and agencies combined accounted for nearly 8% of all federal funds to state governments for R&D.

While New York accounted for 28% of all federal funds to state governments for R&D in FY 2020, the next 10 largest states with expenditures for R&D from federal funding accounted for an additional 34% of the total federal funds to states for R&D (table 2). Florida and South Carolina followed New York, with $30 million each in federal funds, while Texas and California each reported $23 million in federal funds.

Some states are more reliant on federal funds for their R&D than they are from their own state sources. For example, South Carolina reported $30 million in federal funds for R&D compared to nearly $17 million in state funds. In addition to South Carolina, the state governments of Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Montana, New Mexico, Tennessee, Vermont, West Virginia, Wisconsin, and Wyoming had more expenditures from federal funds for R&D in FY 2020 than they did from their own state appropriations.

Among all functions, health-related R&D has shown the largest dollar change between FY 2009 and FY 2020 (figure 3). When adjusted for inflation,^{​Gross domestic product implicit price deflators were used to convert current to constant 2012 dollars. Data on calendar year, historical figures, 1953–2020 are taken from Bureau of Economic Analysis (BEA), National Economic Accounts, Gross Domestic Product, accessed 22 June 2021. Based on the BEA practice of updating the reference year based on the five-year comprehensive update (CU), the July 2018 CU revised the reference year from 2009 to 2012.} health-related R&D expenditures increased 31%, from $690 million in FY 2009 to $905 million in FY 2020. During the same period, R&D expenditures for agriculture and for environment and natural resources increased 79% and 14%, respectively, whereas transportation decreased 4%, from $255 million in FY 2009 to $246 million in FY 2020. The energy function was not collected separately until FY 2010,^{​The energy category was introduced with the FY 2010 and FY 2011 Survey of State Government Research and Development. Previously, energy-related R&D was reported primarily in the other category and, to some degree, in the environment and natural resources category.} but it has shown increases in inflation-adjusted expenditures of 45% from FY 2010 to FY 2020.

Of the 699 state agencies that responded to the survey in FY 2020, the largest 20, by total expenditures, accounted for 58% of all agency R&D expenditures (table 4). To illustrate how concentrated expenditures are for health-related R&D, these 20 agencies accounted for $799 million of the $1.0 billion in state agency health R&D, or almost 78% of the funding for total health-related R&D. Although many states invested in health-related R&D, it is still highly concentrated. The six largest health agencies reporting R&D expenditures in FY 2020 constitute 67% of all state government health-related R&D. State expenditures for energy-related R&D is even more highly concentrated; the California Energy Commission alone accounted for 56% of all state agencies’ energy-related R&D expenditures.

All 50 states and the District of Columbia participated in the FY 2020 survey, and 699 of the 726 selected agencies responded to the survey. Puerto Rico agencies did not report to the survey for FY 2020. Data for the FY 2020 survey were collected for NCSES by the U.S. Census Bureau under an interagency agreement.

Most states’ fiscal year begins on 1 July and ends the following 30 June. For example, FY 2020 begins on 1 July 2019 and ends on 30 June 2020. There are, however, five exceptions to the 30 June fiscal year end: New York (ends 31 March), Texas (ends 31 August), and Alabama, Michigan, and the District of Columbia (ends 30 September). Data presented in this InfoBrief are for each of the respective fiscal year periods as defined by the states.

Terms such as state, state government, and state agencies have equivalent meaning and are used interchangeably throughout this InfoBrief. The amounts reported here are for R&D expenditures of state government departments, agencies, public authorities, commissions, and other dependent entities that operate separately or somewhat autonomously from the central state government. State government R&D totals can display considerable volatility between survey years due to several national and state-specific factors. Large changes are not unusual, especially for discretionary spending items such as R&D. R&D plant expenditures can be highly variable year to year and will increase or decrease as capital projects begin or end.

Amounts reported do not include direct appropriations from state legislatures to universities, colleges, and private organizations. As a result, the $952 million in FY 2020 expenditures reported by state agencies to support R&D performance by academic institutions differs from the figure reported by universities and colleges in the NCSES Higher Education R&D Survey for expenditures on R&D activities funded from state and local government sources.

State- and agency-specific data not available in this InfoBrief are available in the full set of data tables from this survey in the report Survey of State Government Research and Development: FY 2020 at https://nsf.gov/statistics/srvystaterd/#tabs-2.

Pece C; National Center for Science and Engineering Statistics (NCSES). 2021. State Agencies’ R&D Increased 1% in FY 2020; Health-Related R&D Declines for the Second Year in a Row. NSF 22-308. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf22308/.

Christopher Pece
Survey Manager
Research and Development Statistics Program, NCSES
Tel: (703) 292-7788
E-mail: cpece@nsf.gov

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