Research expenditures are commonly understood as a measure of how much research activity a university conducts each year. They are indicators of a university’s ability to compete for funding, attract talent, generate new discoveries, and drive economic and societal impact.
The increase in research expenditures this year was driven primarily by a $48.2 million increase over the previous fiscal year in funding to support the Applied Research Laboratory (ARL), which is largely funded by the Department of Defense. Across the University, including ARL, funding from the Department of Defense increased by $43.8 million. In contrast, funding from both the Department of Health and Human Services and the U.S. National Science Foundation decreased relative to FY2024-25, which led to some colleges experiencing declines in research expenditures. Because of these decreases, facilities and administrative cost recovery was down by $9 million for the University. Facilities and administrative costs are reimbursements from the federal government to support the infrastructure that makes research possible.
“The funding environment over the past year has created significant challenges for research universities throughout the U.S. due to a number of factors, including delays in federal grant solicitations and award decisions,” said Andrew Read, senior vice president for research. “For some researchers, these changes in the funding landscape have disrupted, or even devastated, years of progress. Despite these significant impacts, Penn State’s research enterprise has remained strong and even grown, reaching a new all-time high. Penn State has a long history of conducting critical research in national security, so it’s encouraging that the federal government continues to see value in supporting the Applied Research Laboratory.”
This past fiscal year, from July 1, 2025, to June 30, 2026, Penn State’s expenditures from federal funding totaled $932.7 million, a $10.1 million increase over the last fiscal year, led by the Department of Defense with an increase of $43.8 million for a total of $460.3 million, the Department of Health and Human Services with a decrease of $7.1 million for a total of $209.5 million and the U.S. National Science Foundation with a decrease of $10 million for a total of $83 million. The funding supports priority research areas such as:
- National security: The Applied Research Lab reported $463.4 million in expenditures, primarily funded by the U.S. Navy, including a contract worth up to $99 million that enables purchases and supplies related to research that addresses manufacturing challenges for the Department of Defense.
- Nuclear engineering: Penn State’s College of Engineering reported $243.7 million in expenditures, including a $6 million grant from the U.S. Department of Energy to support the revitalization of nuclear facilities and equipment, while also growing workforce opportunities for students interested in pursuing careers in nuclear materials research and related fields.
- Rural health: The College of Medicine’s research expenditures totaled $168.7 million, including a $28.2 million grant from the National Institutes of Health to the Clinical and Translational Science Institute that is enabling the application of artificial intelligence and biomedical data sciences to integrate clinical and research data to better serve the needs of rural communities and to better represent rural communities in clinical trials.
- Quantum science: The Eberly College of Science reported $150.6 million in expenditures, including a $3 million grant from Delta Gold Technologies to explore applications of nano-scale gold clusters in quantum information science.
- Agriculture and food security: The College of Agricultural Sciences reported $148.9 million in expenditures, including $2.2 million from the National Science Foundation to develop universal virus-based tools that can accelerate and expand gene-editing research across a wide range of arthropod species, to address challenges related to agriculture, human health, and the environment.
- Diagnosing disease: The College of Health and Human Development’s expenditures totaled $82.6 million, including a $39 million National Institutes of Health (NIH) grant to develop tools to detect the earliest signs of dementia years before symptoms emerge.
In addition to federal support, Penn State invested a record $344.9 million, a 7% increase over the previous fiscal year, in internal research infrastructure and strategic initiatives. This funding supports new investments such as the launch of the University’s National Security Institute, expanding Penn State’s role as a trusted federal partner in national defense, and the AI Transformation initiative, which is expanding research capacity in the field of artificial intelligence. Industry, foundations and other sponsors contributed $135.2 million, and the Commonwealth of Pennsylvania contributed $63.5 million.
"Federal investment is the backbone of America’s research enterprise, especially for foundational science that often cannot be conducted outside of universities,” Read said. “Penn State will continue to advocate for strong federal support of research, while simultaneously making our own investments into research as a strategic University priority. Additionally, investments from industry sponsors increased by 11%, which indicates the relevance of the University’s foundational research and its potential to be translated into real-world impact. We are encouraged to see our faculty exploring new funding sources that diversify our research funding portfolio and further extend the impact of our work on behalf of society.”