ANN ARBOR, Mich.—The total volume of research at the University of Michigan rose by 3 percent to a record $1.27 billion — an increase of $37.5 million — in the fiscal year that closed on June 30, 2012.

“Research at UM is tightly coupled with our educational mission, and it is a critical investment in the future,” said Stephen Forrest, vice president for research. “Continued growth in support from a wide range of sponsors highlights the value they see in investing in the people and ideas that drive the vitality of our economy.”

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Funding from the National Science Foundation was up by 7.9 percent, and the Department of Energy increased its support by 8.6 percent. The National Aeronautics and Space Administration’s investment rose by 15.3 percent, and the Department of Transportation increased its funding by 38.4 percent. Funding from the Department of Defense grew by 9.5 percent, reversing a decline in the previous year. Support from the Department of Health and Human Services decreased by 8.1 percent—in part due to the drop in American Recovery and Reinvestment Act (ARRA) funds, better known as the federal stimulus.

Research grants and contracts from industry grew by 5.6 percent to $42.8 million, building on a 4 percent growth rate from the previous year.

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Funding from internal sources grew by 20.8 percent; such funding drew in part on reserves generated over time by the UM Health System’s clinical enterprise.

Total funding from federal sponsors dipped by 3.6 percent, largely due to a decline of $60.4 million, or 53 percent, in research support made available through the ARRA, which was winding down as anticipated. But gains from other federal agencies, a 1.7 percent increase from nonfederal sources and a 20.8 percent boost from internal funds resulted in a net increase.

One of the year’s key awards was the initial grant from the Department of Transportation to the UM Transportation Research Institute for a $22 million project to explore the potential of connected vehicle systems. UMTRI is installing wireless communication devices on 3,000 cars, trucks and buses as well as along roads in northeast Ann Arbor. The devices will allow the vehicles to share data on individual vehicle position, speed and direction, and warn drivers of potential crash situations. Researchers estimate that the technology may be able to help reduce crashes by up to 80 percent.

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“Looking ahead, the overall pace of growth for research funding from the federal government is slowing down,” Forrest said. “However, with the exceptional breadth and excellence of our programs at UM, we are well positioned to diversify our funding sources as well as to maintain our strong relationships with our federal sponsors.”