State Government Agencies’ Expenditures for R&D Increase 11% from FY 2023 to FY 2024

Overview

State governments are both funders and performers of R&D. While all R&D performance is measured in terms of expenditures, not all expenditures are a measure of actual performance. For example, intramural performance of R&D is measured by the expenditures on the work of state employees within state owned and operated facilities. However, state government expenditures to external parties (e.g., businesses, higher education institutions, nonprofit organizations) to conduct R&D on behalf of the funding agency, usually in the form of contracts and grants, are not a measure of performance. This funding is referred to as expenditures on extramural R&D but are not actual performance of R&D by these external performers. The actual performance by these recipient sectors would be measured by their respective expenditures, which are measured on other NCSES surveys.^{​NCSES sponsors several surveys that measure R&D performance for various sectors of the economy. Business sector R&D performance survey results are available from the Annual Business Survey and the Business Enterprise Research and Development Survey. Higher education sector R&D performance is measured by the Higher Education Research and Development Survey. The nonprofit sector R&D performance is measured by the Nonprofit Research Activities Survey. The federal government’s intramural performance of R&D is measured by the Federal Facilities Research and Development Survey and the FFRDC Research and Development Survey.NCSES sponsors several surveys that measure R&D performance for various sectors of the economy. Business sector R&D performance survey results are available from the Annual Business Survey and the Business Enterprise Research and Development Survey. Higher education sector R&D performance is measured by the Higher Education Research and Development Survey. The nonprofit sector R&D performance is measured by the Nonprofit Research Activities Survey. The federal government’s intramural performance of R&D is measured by the Federal Facilities Research and Development Survey and the FFRDC Research and Development Survey.}

Intramural R&D Performance

Five states accounted for 68% of the $812 million in total expenditures for intramural R&D performed by state agencies in FY 2024: New York ($304 million), California ($107 million), Florida ($64 million), Washington ($43 million), and South Carolina ($38 million) (table 2). New York State’s own intramural R&D expenditures accounted for 37% of all state governments’ intramural R&D performance. In FY 2024, 51% ($415 million) of total state government intramural R&D expenditures came from each state’s own funds, while 42% ($340 million) was supported by federal funds. New York State accounted for 45% ($154 million) of all intramural R&D expenditures sourced from federal funds across all states.

State government intramural R&D activities are measured by type of R&D, which has three distinct categories: basic research, applied research, and experimental development. In FY 2024, 76% ($620 million) of all intramural R&D expenditures were directed toward applied research, followed by basic research at 18% ($146 million) and experimental development with just 6% ($46 million) (figure 2). Applied research is defined as original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily toward a specific, practical aim or objective. Given that the nature of state governments’ R&D activities are to address practical aims and solutions to problems for the benefit of their citizenry, it is expected that intramural R&D be primarily directed toward applied research.^{​Basic research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.Basic research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.,​Experimental development is defined as systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.Experimental development is defined as systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.}

Extramural R&D Performance

In FY 2024, all state government expenditures for extramural performance of R&D totaled $2.5 billion. The five states with the largest amount of extramural R&D expenditures were California ($694 million), Texas ($262 million), Florida ($262 million), New York ($168 million), and New Jersey ($110 million). Combined, these state governments accounted for $1.5 billion or 59% of all state governments’ extramural R&D (figure 3).

However, states varied in how they distributed extramural R&D. For example, Texas state agencies directed $197 million of the state’s total $262 million extramural R&D toward higher education institutions, compared with $64 million to companies and individuals. By comparison, the majority of California’s extramural R&D funding was distributed across three sectors, with $270 million directed toward higher education institutions, $230 million toward companies and individuals, and $99 million toward nonprofit organizations.

Overview

Whether performed by state agencies themselves or by other performers outside the agency, most states reported a broad mix of R&D related to state government functions (table 3). Health-related R&D expenditures accounted for the largest share (44%) of state agencies’ R&D. R&D expenditures related to environment and natural resources and to energy accounted for 18% and 15%, respectively, of total state government R&D expenditures in FY 2024. The share of total R&D expenditures related to transportation, agriculture, and all other functions in FY 2024 were 10%, 6%, and 7%, respectively.

Agency-Specific R&D Details

Of the 516 state agencies that responded to the survey in FY 2024, the largest 20 state agencies, by total expenditures, accounted for 58% ($1.9 billion) of all agency R&D expenditures. Although many states invested in health-related R&D, expenditures were highly concentrated among the largest funding agencies. For example, among the 20 largest state agencies, 11 funded health-related R&D. These 11 agencies accounted for $1.2 billion (79%) of the nearly $1.5 billion total for health-related R&D, while the four largest agencies in terms of health R&D expenditures constituted 60% ($880 million) of all FY 2024 state government health-related R&D. State expenditures for energy-related R&D were even more highly concentrated: the California Energy Commission alone accounted for 49% ($246 million) of all state agencies’ energy-related R&D expenditures ($503 million).