This paper provides a financial analysis of NASA's budget during the early 2010s, examining four key areas: payroll forecasting, five-year spending trends, major expenditure projections, and capital budgeting decisions. Drawing on NASA's fiscal year 2013 budget request and Senate testimony from astrophysicist Neil deGrasse Tyson, the paper estimates that personnel costs consume over 80% of NASA's annual budget. It also tracks declining budget allocations as a share of federal spending, forecasts costs for programs such as the International Space Station and the James Webb Space Telescope, and evaluates a hypothetical lighting system procurement decision using cost-benefit analysis.
The paper demonstrates applied budgetary analysis by systematically moving from personnel costs to trend data to program-level expenditure forecasts before narrowing to a specific capital investment decision. This funnel structure — broad to specific — is a standard technique in public-sector financial writing and allows each section to build on the fiscal context established by the previous one.
The paper is organized into four labeled sections. The first estimates payroll costs as a share of NASA's total budget. The second briefly describes the downward trend in NASA's share of the federal budget over five years. The third forecasts spending on specific programs — the Space Shuttle, ISS, James Webb Space Telescope, and Exploration Systems Development — through fiscal year 2017. The fourth evaluates two competing lighting system options using a 20-year cost horizon, concluding that the lower-cost traditional system is the more fiscally prudent choice under current budgetary constraints.
As with any massive bureaucratic entity in which thousands of employees work collaboratively on hundreds of individual projects, the National Aeronautics and Space Administration (NASA) devotes a healthy percentage of its annual budget to maintaining its permanent and temporary workforce. With an annual operating budget of approximately $17.8 billion for fiscal year 2013, calculating the exact amount paid as compensation to employees is a difficult prospect. However, using conservative estimates that take into account budget items such as Space Operations ($4 billion) and Cross-Agency Support ($2.8 billion), it is likely that NASA spends well in excess of $12 billion per year on salaries, pensions, and other employee-generated costs.
This figure aligns with previous estimates made by NASA in fiscal year 2006, when the agency stated in its annual NASA Office of the Inspector General budget request that "82.7% of the proposed budget is dedicated to personnel and related costs, including salaries, benefits, monetary awards, worker's compensation, transportation subsidies and training, as well as the government's contributions for Social Security, Medicare, health and life insurance, retirement accounts, matching contributions to Thrift Savings Plan accounts, the required 25% law enforcement availability pay for criminal investigators, and permanent change of station costs."
With the federal government already targeting NASA for budget cuts in the wake of a devastating and prolonged recession, the notion of instituting a pay raise for employees — whether 2%, 4%, or 5% — would appear to be a nonstarter. As a hypothetical exercise, however, it is clear that increasing salaries, both as a reward for NASA's tenured employees and as an incentive for the brightest scientific minds to work for America's space exploration agency, would provide substantial benefits.
As renowned astrophysicist Neil deGrasse Tyson wrote in testimony provided to the U.S. Senate Committee on Commerce, Science, and Transportation, "right now, NASA's annual budget is half a penny on your tax dollar… (but) for twice that — a penny on a dollar — we can transform the country from a sullen, dispirited nation, weary of economic struggle, to one where it has reclaimed its 20th century birthright to dream of tomorrow" (2012). Lofty abstractions aside, it stands to reason that the productivity of an agency like NASA could be noticeably increased by virtue of such pay raises, because when considered in conjunction with NASA's existing mandate to streamline its operations and enforce efficiency, the funds would likely be allocated appropriately.
During the last five years, the federal government has been forced to reckon with certain inescapable economic realities, and as a result the portion of the federal budget dedicated to NASA has trended downward. As part of the agency's ongoing effort to tighten the proverbial belt — eliminating inefficient or outdated programs while diverting resources to more fruitful projects — NASA's total expenditures have decreased slightly, and prestigious initiatives such as the Space Shuttle program have been shuttered. NASA's budget history as a percentage of the total federal budget makes it quite evident that the agency's budgetary health is trending in a decidedly downward direction.
After drastically reducing its budget for the operation of its iconic Space Shuttle fleet — from $556 million in fiscal year 2012 to just $70.6 million in fiscal year 2013 — this major expenditure is scheduled to come off the books entirely in fiscal year 2014. Perhaps concurrently, NASA's expected budget for its involvement with the International Space Station will increase slightly during each of the next five years, moving from $2.8 billion in fiscal year 2012 to $3.2 billion in fiscal year 2017.
Another major expenditure that NASA is planning to absorb during the next five years is the controversial James Webb Space Telescope, which is tentatively expected to launch in 2018. Having garnered negative attention due to a regrettable series of scheduling mishaps and cost overruns, the James Webb Space Telescope is budgeted for $518 million in fiscal year 2013, with projected increases to $627 million (fiscal year 2013), $659 million (fiscal year 2014), $646 million (fiscal year 2015), and $621 million (fiscal year 2016).
The third most impactful expenditure within NASA's budget is Center Management and Operations, which cost the agency $2.2 billion in the current fiscal year and is forecasted to cost approximately $2.09 billion during each of the next five fiscal years. Finally, NASA has invested $3.7 billion to fund Exploration Systems Development, which is dedicated to creating America's next generation of manned space vehicles as well as a new fleet of unmanned planetary exploration devices. This expenditure is expected to rise to $3.9 billion during the next fiscal year and to reach $4.07 billion during each of the four fiscal years that follow.
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