ANN ARBOR—The total volume of research at the University of Michigan rose by 4.3 percent to a record $1.33 billion—an increase of $54.7 million—in the fiscal year that closed June 30, 2013.

“University research has long been critical to the vitality and competitiveness of our nation’s economy, and this growth at U-M reflects our sponsors’ continuing confidence in the value of this investment here,” said Stephen R. Forrest, vice president for research. “The research we conduct on our campuses helps us develop the people and the ideas that drive the creation of new products and services, new companies and entirely new industries.”

Federal sponsorship, which accounts for almost 62 percent of the total research volume at U-M, grew by 2.8 percent. This included increases of 12 percent ($9.6 million) from the National Science Foundation, 11 percent ($4.2 million) from the Department of Energy, 19.8 percent ($3.5 million) from the National Aeronautics and Space Administration, 38.7 percent ($4.6 million) from the Department of the Air Force and 128.7 percent ($7.7 million) from the Federal Highway Administration.

Some of the rise in support from these federal agencies was offset by lower funding from other agencies. In particular, funding from the National Institutes of Health fell by 1.8 percent, or $9.6 million. NIH is by far the university’s largest research sponsor, amounting to $509.7 million last year, or more than 38 percent of the total research budget at U-M.

Despite the record research volume in FY13, Forrest is concerned about the prospects for federal research support in the coming year because the effects of sequestration—the 5.1 percent across-the-board cuts to discretionary spending mandated under the federal Budget Control Act of 2011—will become clear in the current fiscal year.

“Any decline in federal research funding will cut back on our ability to train the next generation of researchers and innovators, and to generate new ideas with potential in the marketplace,” Forrest said. “This puts our nation at a competitive disadvantage, particularly when other nations are increasing their investments in university research.”

In FY13, research grants and contracts from industry grew by 14 percent to a record $73 million. Industry funding at U-M is now 8 percent of total externally sponsored research, compared to a national average estimated to be 5 percent by the National Science Foundation.

“Even though this is a small part of the total, our partnerships with industry are especially important,” Forrest said. “Close relationships with industry inform the direction of our research projects and help us better prepare our students for the challenges they will face in their careers in the private sector.”

Funding from the state of Michigan increased more than sixfold, to $3.5 million, largely due to state support for programs aimed at building stronger relationships between the state’s research universities and its business community.

Among the year’s key awards was a $28.4 million five-year grant renewal for the U-M Cancer Center from the National Cancer Institute, which has supported the center since 1988.

U-M researchers also will play an integral role in a major new project to develop breakthrough batteries for longer-range electric vehicles and a power grid that can store electricity generated from solar and wind energy. The Department of Energy will provide up to $120 million over five years to fund this collaborative effort among five universities, five national laboratories and four private firms.