ANN ARBOR—Total research spending at the University of Michigan reached a record level of $1.3 billion in the fiscal year that closed June 30, 2013, capping steady growth over the last decade.

But according to S. Jack Hu, interim vice president for research and head of U-M’s Office of Research, the recent decline in federal funding for university research poses a serious challenge for the future.

“Continued investments in research are central to our ability to attract top faculty and students, and to prepare our students for the role they will play as the innovators who will shape all aspects of our economy and society,” Hu said in annual report presented today to the U-M Board of Regents. “We will have to work harder to maintain our competitiveness for the shrinking pool of federal funds while pursuing new avenues for research support.”

Hu pointed out that federal contracts make up almost 62 percent of research at U-M. After a long period of steady growth since World War II, federally funded university research reached a peak of $159 billion in 2010 (not including a short-term boost under the American Recovery and Reinvestment Act). By the end of fiscal year 2013, total funding was down by 10 percent from what it was a decade previously.

“During the decline over the last 10 years, we have shown our competitiveness by increasing the volume of federally supported research at U-M by 22 percent,” Hu said. “But competition will be more intense moving forward.”

Hu outlined several approaches under way to sustain the research enterprise:

• Submit proposals for larger projects that build on innovative partnerships and the university’s interdisciplinary strengths: One recent example of this is the American Lightweight Materials Manufacturing Institute announced by the White House, a $148 million initiative to support the production of advanced lightweight metals led by U-M, Ohio-based manufacturing nonprofit EWI and Ohio State University.
• Strengthen industry outreach: In fiscal year 2013, the volume of industry-sponsored research rose by 14 percent to $73.2 million. The U-M Office of Research’s Business Engagement Center has refined its strategy to continue to expand these mutually beneficial partnerships.
• Expand clinical trials: The U-M Medical School is stepping up its efforts in this arena as it works with U-M’s Office of Research and Sponsored Projects, which manages the submission of all research proposals and negotiates all contracts.
• Seek more funding from foundations: U-M’s Office of Foundation Relations has recently enhanced its resources and support for faculty seeking funding from foundations.
• Pursue philanthropic gifts for research: With the launch of a comprehensive fundraising campaign in fall 2013, U-M has an opportunity to work with the Office of University Development to seek research funding from philanthropic sources.
• Develop more international partnerships: In addition to diversifying sources of research funding, international partnerships enrich research and education by drawing on complementary strengths and perspectives of other cultures to address common challenges.
• Streamline the proposal submission process and improve faculty productivity: The U-M Office of Research and Sponsored Projects has worked with faculty and administrators across campus to boost the efficiency and effectiveness of proposal development and submission.

A copy of the Annual Report on Research: FY2013 Financial Summary presented to the Regents is available at http://bit.ly/1dqXgjz.