Winners and Losers: Formula versus Competitive Funding of Agricultural Research

State Agricultural Experiment Stations (SAESs) were established with federal formula funding by the Hatch Act of 1887. In 1955, the Hatch Act was amended and a number of subsequent formula funding programs were consolidated under the USDA Cooperative States Research Service (CSRS), which today is known as the Cooperative Research, Education and Extension Service (CSREES). Currently, all of the Hatch funds and a small amount of other formula funds go to SAESs. In 1977, CSRS established its first competitive research grant program. However , this program remained quite small until 1990, when it was renamed the National Research Initiative (NRI) Competitive Grants Program with a much larger funding authorization. Currently, the SAESs account for 60% of U.S. public agricultural research, with 7% of SAESs funding obtained from Hatch funds and 2.3% from NRI Grant funds (Huffman & Evenson, 2006b, pp. 107, 117-118). Hence, the SAES system has become relatively diversified in its funding sources after starting with only Hatch funding. The characteristics of these funding sources are quite different from a SAES perspective. • Formula funds are allocated among the states by a legislated formula, the choices of projects and scientists to support are made locally, oversight is local, and funding is recurring. • Grant or NRI funds are allocated to proposals submitted to programs with identified priority areas; only a small share of submitted proposals are usually funded; the process consumes many resources relative to grant funds awarded, and there is no guarantee of success or continuation of funding after the initial grant period. The composition of these funds has changed substantially over time. From 1980 to 2003, the USDA-administered federal formula funds declined by 57% or $124 million (2,000 dollars; Huffman & Evenson, 2006a). Over this time period, NRI appropriations increased by $120 million , but less than 40% of NRI funds go to the SAESs. The remainder goes to non-SAES units, especially those in non-land grant universities. Hence, CSREES funding of SAESs has fallen dramatically over the past 25 years. Other changes in SAESs' funding have also occurred since 1980. They include an 88% increase in grants and contracts from non-USDA federal agencies, a 51% increase in contract , grant, and cooperative agreement funding from USDA agencies other than CSREES, and a 100% increase in Congressional earmarks or special grants for research. Prospects are that the funding composition will continue to change. In the Fiscal 2007 Budget …