Fiscal Year 2004 Federal Funding Picture Coming into Focus

Once again, the annual ritual known as the Federal appropriations process is winding down. Congress is working feverishly to complete work on 13 appropriations bills that will set Federal spending levels for fiscal year (FY) 2004, which began on October 1. Nine of these bills contain funding for science and technology (S&T) programs. The U.S. House of Representatives has passed all 13 of the FY 2004 spending bills, while the U.S. Senate has passed only five. Only two — those for the Departments of Defense and Homeland Security — have been signed.

In his FY 2004 budget, President Bush proposed $122.7 billion for research and development (R&D) across all federal agencies, a seven percent increase from FY 2003. In aggregate, the House bills include $125.9 billion for R&D, while the Senate bills, as they currently stand, provide about $125 billion for R&D.

Following Senate action, differences in the House and Senate versions of the spending bills will be worked out in conference. While funding levels are relatively close in House and Senate versions, a number of contentious R&D funding issues still remain. Since final consensus was not reached before the end of September, a continuing resolution — or CR — has been passed to provide temporary funding for most Federal agencies. Until the appropriations process is completed, FY 2004 grant competitions at many agencies will be put on hold.

Following are highlights from some of the spending bills affecting the interests of TechVision21 clients:

•		Nearly all of President Bush’s proposed $8.4 billion increase in R&D would go to the Department of Defense (DOD), the Department of Homeland Security (DHS), and the National Institutes of Health (NIH); in aggregate, funding for all other R&D agencies would remain flat.
•		In FY 2003, the newly created DHS received $669 million in appropriations for R&D activities, including $521 million for its S&T Directorate, whose responsibilities include: threat and vulnerability assessment; critical infra- structure protection; biological, chemical, high explosive, and nuclear & radiological countermeasures; anti-missile devices for commercial aircraft; and supporting related university programs. For FY 2004, House and Senate conferees have agreed to $918 million for S&T.
•		In FY 2004, DHS will launch the Homeland Security Advanced Research Projects Agency (HSARPA). Modeled on DOD’s Defense Advanced Research Projects Agency (DARPA), HSARPA will award extramural grants for: basic and applied research to promote revolutionary changes in homeland security technologies, developing and testing potential homeland security technologies, and accelerating the development of homeland security technologies.
•		For the Economic Development Assistance programs at the Department of Commerce, the Senate bill includes an appropriation of $357.1 million, almost $27 million above the Bush Administration’s request. The House bill provides only $288.1 million.
•		The Department of Commerce’s Advanced Technology Program (ATP) is once again a point of bitter contention between the White House, Senate and House. President Bush proposed only $27 million for the program, to pay for existing multi-year awards while winding the program to a close. The House bill provides no funding for ATP, closing it immediately. In contrast, the Senate bill provides $270 million for ATP, a substantial increase over FY 2003 funding.
•		The Manufacturing Extension Partnership (MEP), is also a source of contention. President Bush requested $13 million for MEP in FY 2004, a steep decrease from its FY 2003 level of $107 million. The Senate bill funds MEP at current levels, while the House bill cuts MEP funding to $40 million. The House and Senate have demonstrated consistent support for MEP in the last two years, countering the Administration’s contention that the success of MEP argued that it is no longer necessary. Strong and effective lobbying — of House members in particular — is a hallmark of the MEP centers and their state supporters. Therefore, the final appropriation may well end up closer to the Senate version. The House and Senate have demonstrated consistent support for MEP in the last two years, countering the Administration’s contention that the success of MEP argued that it is no longer necessary. Strong and effective lobbying—of House members in particular—is a hallmark of the MEP centers and their state supporters. Therefore, the final appropriation may well end up closer to the Senate version.
•		The Technology Opportunities Program (TOP) of the National Telecommunications and Information Administration also remains controversial. For the third year, the Bush Administration has proposed elimination of this program.The House bill provides no funding for TOP, but the Senate bill funds TOP at $15.5 million.
•		The National Science Foundation is in for an increase, but the amount is up in the air. While the President proposed $5.5 billion for NSF in 2004, a 3.3 percent increase over FY 2003, the House bill includes an increase of 6.2 percent and the Senate bill a 5.2 percent increase. Still, all three figures are more than a billion dollars below the $6.6 billion called for in the NSF authorization bill, signed into law in December 2002, which proposed doubling the NSF budget by FY 2007. NSF’s Social, Behavioral and Economic Sciences activities, and Education and Human Resource programs are slated for substantial increases, while Education and Human Resources R&D funding likely will remain flat.
•		The President’s proposed FY 2004 budget includes several multi-agency science and technology initiatives. They are, in order of level of funding requested, Combating Terrorism ($3.2 billion), Networking and Information Technology ($2.2 billion), Climate Change ($1.7 billion),National Nanotechnology Initiative($847 million), Physical Sciences, No-Child Left Behind K-12 Mathematics and Science Education R&D Initiatives,and Promoting Innovation. The majority of funds for these initiatives within participating agencies are not discrete, identifiable programs in the budget, but rather are included within budgets for offices and/or programs. Once the appropriations bills become law, and the final budget allocations filter down to the line offices, it will be possible to perform a final tally for these initiatives.
•		The H1-b Visa Grant Program, which has provided substantial funds for IT skills training, funded by application fees required of companies for each worker brought into the US, may be at an end. The up to $200 million annual amount managed by the Department of Labor was a result of legislation that temporarily raised the cap on the number of visas allowed each year. That law expired on September 30, and the number of allowable visas has dropped back to 65,000. The application fees and the grant program also ends…unless Congress acts.
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