Brief on Federal Research Funding
Texas A&M University
Student Government Association
2009-2010
Table of Contents
Background and History…………………………………..3
Facts and Statistics………………………………………...4
Effects on Students………………………………………..5
Economic Implications……………………………………6
Effects on Texas and the United States……………….......7
Sources………………………………………………….... 8
Background and History
Government support for basic research at universities is critical. According to
Kent Hill, a research professor in the W. P. Carey School of Business, "because of
spillovers and an inability to appropriate commercial value from research findings,
societies will under invest in basic research unless it is supported by the government."
Universities are better suited to basic research than are private firms or other research
organizations (such as government laboratories). Universities and colleges perform nearly
60 percent of basic research in the United States, Hill notes. The involvement of students
in basic research at universities allows for easier transfer of research findings to industry
as graduate students take their knowledge to work in industry after graduation. And
because universities require students to take a range of classes, university-trained
researchers are better able to have a big-picture understanding than are researchers
trained without broad curriculum requirements. [1]
The federal government is the largest source of funds for academic research, and
the 2007 fiscal year represented the second straight year of decline in its support after
inflation, according to the report, issued at the end of August by the National Science
Foundation. The federal total was $30.44-billion, a net drop of 1.6 percent from 2006.
Such a two-year decline had not occurred since the NSF began tracking those figures, in
1972. Of the top 100 institutions receiving the most federal research funds, 43 saw a
reduction in those dollars in 2007. In 2006 just 29 got less than they did in 2005. [2]

Texas A&M University is designated as a land, sea, and space grant institution
which reflects a broad range of research with ongoing projects funded by agencies
such as the National Aeronautics and Space Administration (NASA), the National
Institutes of Health, the National Science Foundation, and the Office of Naval
Research. Texas A&M ranks in the top 20 American research institutes in terms
of funding and has made notable contributions to such fields as animal cloning.

The National Science Foundation has named Texas A&M University as the only
new member of the NSF’s annual list of the Top 20 Academic Research
Performers in the United States. Texas A&M joins an elite list including such
standouts as the Johns Hopkins University, Ohio State, Penn State, Duke
University, Stanford University and the Massachusetts Institute of Technology
(MIT) – and is the only Texas institution to rank in the NSF’s Top 20 for 2009.
[3]
3
Facts and Statistics
As of June 30, 2007, the market value of the endowment funds of the 120 colleges and
universities with the largest endowment amounts was $322 billion, reflecting an increase
of 18 percent compared to 2006, after adjustment for inflation. The five colleges with the
largest endowments in 2007 were Harvard University, Yale University, Stanford
University, Princeton University, and University of Texas System.
Endowment funds of the 20 colleges and universities with the largest endowments, by rank
order:
2006 and 2007
Market value of endowment, as of
June 30 (in thousands of dollars)
Rank order1
Institution
Total of endowments for the 120 institutions with
the largest endowment funds in 2007
2006
2007
$266,783,518
$322,194,627
Harvard University (MA)
1
28,915,706
34,634,906
Yale University (CT)
2
18,030,600
22,530,200
Stanford University (CA)
3
14,084,676
17,164,836
Princeton University (NJ)
4
13,044,900
15,787,200
University of Texas System
5
13,234,848
15,613,672
Massachusetts Institute of Technology
6
8,368,066
9,980,410
Columbia University (NY)
7
5,937,814
7,149,803
University of Michigan
8
5,652,262
7,089,830
9
5,313,268
6,635,187
10
5,642,978
6,590,300
Northwestern University (IL)
11
5,140,668
6,503,292
University of California
12
5,541,930
6,439,436
University of Chicago (IL)
13
4,867,003
6,204,189
University of Notre Dame (IN)
14
4,436,624
5,976,973
Duke University (NC)
15
4,497,718
5,910,280
Washington University (MO)
16
4,684,737
5,567,843
Emory University (GA)
17
4,870,019
5,561,743
Cornell University (NY)
18
4,321,199
5,424,733
Rice University (TX)
19
3,986,664
4,669,544
University of Virginia
20
3,618,172
4,370,209
University of Pennsylvania
Texas A&M University System
2
SOURCE: U.S. Department of Education, National Center for Education Statistics.
(2009). Digest of Education Statistics, 2008 (NCES 2009-020), Chapter 3.
4
Texas A&M University Research Funds Data [4], [5]:
5
Effects on Students


About 90 percent of the fastest-growing jobs of the future will require some
postsecondary education or training (U.S. Department of Labor).
College graduates in the U.S. earn nearly twice as much as workers with just a
high school diploma (Organization for Economic Co-operation and
Development).
These facts speak to the impact that research funding has on students at the university
level. With more funding for advanced and innovative research, the level of achievement
of the school and its student body will be on a higher level, therefore increasing the
incentives to become involved in the scientific and technical fields of study. The more
prestigious the school, the more students will be attracted to the possibility of attending
and therefore raising the bar of intellectualism at Texas universities. By increasing the
funding of higher education research, the government will be producing workers and
minds that can keep up with the highly competitive world outside of the U.S. With the
advancements these students and their advisors make with the funds to their projects,
students will be motivated to pursue higher education and succeed in their futures. With
the possibility that federal grant money would be decreased, the value of the education
could also be decreased, leaving the future of the United States’ economy and so-called
“scientific edge” in the hands of more advanced and better funded research
environments-other countries.
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Economic Implications
Higher education research funding, in short, is declining due to its economic
consequences. All legislative bills that address this issue will potentially have large fiscal
burdens attached, and therefore could be put on the back-burner in favor of more
controversial or more profitable issues in the federal government such as health care
reform. For bills with large financial demands, the result is often higher taxes. But, with
legislation that increases research funding for Texas universities, the road to economic
recovery will be paved.
Although we can not pinpoint exact cost estimates, it can be assumed that there
are economic consequences for not only the federal government but also for common
citizens. However, as was previously stated, higher education research creates a more
intelligent and prepared workforce. In 2009, Texas A&M University, one of the front
runners in university research, was ranked number one in a “Smart Money’ report on
pay-back ratio. Although university research funding may cause an increase in taxes,
students participating from university research will benefit in more than one way.
It is vital our government remains a source of funding for higher education
research to ensure all research frontiers are pushed as far as possible.
"We all have a responsibility to make sure our higher education system continues to spur
innovation and economic growth and gives more Americans the chance to succeed in the
knowledge economy."
— U.S. Secretary of Education Margaret Spellings
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Effects on Texas and the United States
"Growth in the stock of knowledge has been the most important factor behind the
dramatic rise in living standards in the United States and other countries over the past
one hundred years" -Kent Hill, Research Professor in the W. P. Carey School of
Business.

According to the Congressional Budget Office, studies of federal spending for
basic research in the past, particularly studies of research conducted at academic
institutions, have estimated that the average returns from that spending exceed the
returns that might have been gained had those resources been put to other uses.
Additional federal spending could generate comparable benefits, although the
returns to individual projects are likely to vary. Also, the gains from large
increases in spending might be constrained if sufficient scientific and technical
workers and facilities were not available. [6]

As a first approximation, universities produce more research without a significant
change in its quality at the margin when federal funding increases. Finally, the
effect of changes in R&D funding on outcomes is gradual, according to a study
done by A. Abigail Payne of McMaster University and Aloysius Siow of the
University of Toronto [7]

University research might be expected to have local impacts due to the difficulty
in transferring tacit knowledge outside local areas, and the tendency of graduates
to stay in the city where they went to school. There is empirical evidence that
university research impacts local economies, but that impact may not be very
large for most universities. [8]

Basic research, in the U.S., is preformed in the unique way that it is a coupling of
research and graduate education. "In other countries, few universities rank among
the best research institutions, and many of the best research scholars in science
and engineering do not teach," Kent Hill writes. The fact that top U.S. researchers
are also teachers presents an efficient way for knowledge to be diffused
throughout the country -- from innovative professors through graduate students
who, upon graduation, take their knowledge to others. [9]
8
Sources
[1] http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1207
[2] http://ezproxy.tamu.edu:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true&
db=tfh&AN=34559711&site=ehost-live
[3] http://rgs.tamu.edu/news/texas-a-m-university-moves-into-top-20-nsf-research-
institutions
[4] http://rgs.tamu.edu/files/2008ExpendituresbySource.pdf
[5] http://rgs.tamu.edu/files/2008ExpendituresbyFederal.pdf
[6] http://www.cbo.gov/doc.cfm?index=8221&type=0&sequence=1
[7] http://www.bepress.com/bejeap/advances/vol3/iss1/art1
[8] http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1293
[9] http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1207
Compiled by Julia Griswold and Emily Slack, Legislative Relations
Commission, Texas A&M University Student Government Association. This document
may not be copied, reproduced or distributed without the written consent from the
Legislative Relations Director. The Positions within this document do not necessarily
reflect the views of the Texas A&M Student Body.
Prepared by Julia Griswold and Emily Slack
Texas A&M University Legislative Relations
kmputman@tamu.edu
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