The ARRA ‘bump’ in S&T spending and the long-term hazards of doubling

In an earlier post, I had promised some additional thoughts about unintended consequences of the 10-year doubling of the federal budget for research and development in the physical sciences, a policy which was embedded in President Obama’s FY 2010 budget outline.

The federal fiscal year 2010 is under way this month, but as should be no surprise, as of today we don’t have anything like a signed set of appropriations bills.

What we do know is that we’re about half a year into the S&T components of the American Recovery and Reinvestment Act (ARRA), and judging by the press releases streaming from our major research universities and proud governors, the money is beginning to flow.
No university I know is turning down the chance to apply for ARRA or “stimulus act” funding, but what is not widely understood is that there is some apprehension in the academic community about this.

Over a very temporary, two-year period of intense spending, the budget for NSF will jump by more than half, and that for NIH by about a third, before settling back into long-term trends. Not all this extra money will be spent on research at either agency, and at the NIH not even all the research share will be spent outside the agency’s own labs, but especially at the NSF it’s reasonable to assume that the overall percentages that end up spent in the university sector will remain roughly what they have been.

To understand why that’s a problem, consider that the basic organizational unit at a research university is the faculty laboratory, where a professor basically runs a small business that expands or contracts based on success at attracting grant funding. Incremental work is done by graduate students, postdoctoral fellows, and professional staff who may be shared over several projects or dedicated to one. It’s these sources of labor that go on or off budget, as grant availability in the lab rises or falls.

While not every science professor on a campus may win an ARRA award, in the aggregate most elite institutions will capture their share of the temporary but huge percentage bump in NSF funding, and that means they must do a lot of hiring in a hurry (good! that’s stimulus) but then possibly a lot of firing when the two years are up (not so much). It’s all made harder by the fact that it takes a graduate student in S&E fields more than seven years on average to attain the doctoral degree. Pulling a student off a stimulus project when the money is gone is disruptive to their course of study, and may actually put their tuition-remission at risk if no other funded budget line can be found.

So institutions have swallowed hard and found ways to mitigate these risks – presumably by writing grant proposals that have asked for as high a percentage as they can get away with of non-personnel costs such as equipment, supplies, communications, travel to conferences – whatever doesn’t involve someone who will have to be fired or moved to another budget line two years later. Even though the NSF budget will supposedly be about 14 percent higher then than today (that’s two years of annual 7 percent growth on a 10-year doubling curve), and some ARRA grants may be expended over more than two years, 14 percent minus 50 percent is still a pretty large negative number, and the research enterprise will shrink rapidly, though maybe not as fast as it expanded. At the NIH, where the doubling was already done last decade and growth rates have now settled into the low single digits, the deficit will be even worse.

Now look forward to resumption of the doubling of federal support for physical sciences (let’s focus on NSF) over the fiscal years 2007-2016. Assuming that the percentage of a typical single grant that goes to these variable costs remains roughly constant over time and across all fields in which grants are awarded, a 7 percent annual increase in NSF funding should translate into a similar annual percentage increase in the number of graduate students and postdocs now supported under NSF funding (again, we’re talking in the aggregate, not at the level of the lab where labor is generally added in units of one body at a time).

And then, at about 7 years into the doubling cycle or 2013 or so, the first crop of incremental graduate students will start obtaining their degrees. Where will they go? In 2006, some 20 percent of S&E doctoral degree recipients told NSF surveyors they were headed for employment in industry. But in American industry, employment in all S&E occupations together is rising only 3.5 percent a year, and when one restricts the count to those with doctoral degrees, the growth rate is little better than 2.5 percent a year and sometimes less, depending on the field. American industry cannot keep absorbing even the minority share it takes now, when total supply is rising more than twice as fast as demand. So much for a “pipeline” issue.

And once the NSF doubling curve is done, we can’t keep the remaining doctoral degree recipients in academia either. This is exactly what’s happened, I submit, in the NIH doubling of the last decade. A lot of well qualified graduate students and postdocs got dumped on a job market quite unready to receive them, and the few that did make into junior faculty positions in academia found it ever harder to compete for that first award. So careful what you wish for, budget-doubling advocates!

Under the circumstances two additional data points are relevant. Of the more than half-million graduate students enrolled in science, engineering and health fields in 2006, fully one-quarter were not U.S. citizens or permanent residents and were here on only temporary visas. Of the 50,000 postdoctoral students in the same fields, that share was 60 percent.

So if we can’t keep them in academia and we can’t absorb them in American industry these folks are going home to their countries of birth and taking their taxpayer-financed knowledge and skills with them. Now what exactly is it we’re accomplishing? Shame on us if we don’t give them green cards and put them on a path to U.S. citizenship (as leadership in the House has proposed), but even so there are some big holes in our logic that we need to address.

All data from the NSF Division of Science Resource Studies, either published in Chapters 3 or 5 of Science and Engineering Indicators or in special reports. Don’t agree with me? Put it in the comments.

  • Scott Swinton October 17, 2009, 5:44 pm

    Viewed from a state university, one key element is missing from your characterization of how university labs are viewing ARRA S&E funding: state budget crises. Many states are cutting higher education funding to balance their budgets in the face of revenue shortfalls. Arizona, California and Michigan are examples. Federal funding in general, and ARRA funding specifically, suddenly looks like one of the only accessible ports in this storm. So far from raising doubts about how to finish off additional grad students taken on with ARRA funding, the perspective from Michigan State University is that ARRA funding may enable currently students to finish as other funding sources dry up.

  • David Hochman October 17, 2009, 7:17 pm

    Thanks, Scott — very valuable point! Can you say what proportion of grad student support at MSU comes from state funding vs. external sponsored research? Is it possible to find those data publicly? The NSF tables certainly don’t allow that level of breakdown.

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