This study examined expenditure patterns associated with tuition increases in the Seventh-day Adventist (SDA) higher educational system. Ten liberal arts institutions were examined who were willing to provide the detailed financial data necessary to conduct the cost study.

The research methodology included: (1) a literature review, (2) interviews with personnel that have expertise in conducting cost studies and/or in higher education institutional finances, (3) collection of cost data, (4) interviews with institutional staff, and (5) an analysis of the data. The data collected included: (1) detailed expenditure and revenue data for the fiscal years 1979-1980 to 1991-1992, and (2) interviews with personnel at institutions having the greatest expenditure increases about perceived environmental factors influencing expenditure patterns. The cost analysis process consisted of inflating the 1980 costs-per-credit-hour, using the Higher Education Price Index, to a 1992 cost equivalent, and then determining the increases in cost-per-credit-hour above inflation that occurred for the nine functions of expenditure, and their 34 activities within these functions, as defined in NACUBO's Accounting and Reporting Manual.

The study found the functions, ordered from highest increased cost to lowest, to be Student Financial Aid, Institutional Support, Instruction, Academic Support, Student Services, Depreciation, Plant Operations, Public Services, and Research. Institutional Student Financial Aid granted increased in all of the institutions as a result of increasing tuition and decreasing government financial aid. Institutional Support increased mainly from increases in medical insurance, general liability insurance, security, public relations, and additional administrative personnel. Instruction increases mostly were associated with new and expanded programs and faculty salary increases to keep up with the Cost Price Index since 1972. Academic Support increases resulted from Ancillary Support costs for engineering and technical programs offered. Utilities decreased in cost-per-credit-hour as a result of computer controlled energy systems and conversion to low energy lighting systems on most campuses.

The study indicates that the SDA institutions need to contain costs because increasing tuition at the same rate observed since 1980 appears infeasible and there are no other foreseeable viable sources of revenue. Efforts should be made to curb increases in institutionally provided student financial aid. The costs of disciplines should be evaluated, as well as the costs of programs offered, in order to exercise more precise cost control.