169 



Absent the ability to direct formula funds to specific application before award, the USDA 

 relies on initial review of proposals and evaluation of accomplishments resulting from this 

 research to judge relevjmce and accountability. Such reviews, which are conducted on an 

 ongoing basis, and which involve oversight by other parts of government from time to time, 

 consistently show a very high return on this investment. Moreover, as indicated above, there 

 is often a currency and relevancy of appUcation of these funds that is based in early 

 recognition and intervention which occurs at the grass roots level on unforeseen problems 

 and opportunities. Formula funds may, in part, be directed to long-term research goals. 

 But, individual projects are subjected to annual review and renewal on a three-to five-year 

 cycle. 



The mandate to use 25% of Hatch funds for regional research has been the continuing 

 motivation for strong regional associations of state agricultural experiment station directors 

 and for promoting meaningful collaboration and cooperation among SAESs. As with other 

 projects funded with Hatch money, there is at least a three-to-one leveraging of federal 

 funding with state appropriations. And, the process of estabhshing, reviewing, approving and 

 evaluating regional research projects is even more rigorous than with other projects. This 

 provides a strong assurance regional and of national relevancy. 



As part of the quadrennial revision of the ESCOP-CSRS, the CSRS is developing a major 

 assessment of the dynamics of base programs over a ten year period. This should be a 

 milestone document for evaluation of the relevance and accountabihty of formula funding. 



From this description, one would logically conclude that formula funds are an excellent 

 federal investment with a demonstrated track record. And it would seem obvious that 

 individual SAES directors would prefer the maximum flexibility in investment decisions no 

 matter what the source of funds. With the serious erosion of research capacity that has 

 occurred in the last two to three years from loss of state appropriations, it would seem likely 

 that SAES directors would be particularly interested in maintaining and expanding formula 

 funds. We believe all these assertions to be true. Why then is there an apparent reluctance 

 for the system to place its major emphasis on securing and expanding this type of federal 

 support? 



As testimony from other panelists has suggested, formula funds have been regarded by 

 several preceding administrations (especially at poUcy levels broader than agriculture) and 

 by Appropriations Committee staff and members as an entitlement; an open ended 

 appropriation for which it is difficult to assure either relevance or accountabihty. 

 Arguments to the contrary and analysis of the return on investment from these funds have 

 been sufficiently persuasive to sustain them over the years. But, the more general concern 

 has kept formula funds from achieving more than modest (less than inflation) growth in the 

 decade of the 90s. 



