Cost issues in higher education have received considerable attention in the literature of higher education over the past three decades. Since the early 1970s, numerous studies (e.g., reviews of the literature on the subject. Studies examining institutional costs to analyze internal efficiency have used various frameworks and methods. These studies have examined a large number of concepts (e.g., unit costs, expenditures by function, the structures of costs, and economies of scale and scope) in order to better understand the use of resources in higher education to produce certain outputs. The majority of the studies have examined instructional costs. Typically, they were interested in the following types of questions: How much does it cost to educate each student? Are there any significant variations in the cost of educating students across institutions or within institutions? How much was spent by function (e.g., instruction, research, administration, outreach services, and various forms of infrastructure support)? Have there been significant changes over time in per student costs or expenditures by function (i.e., trend analyses). Are there economies of scale and scope?Several critical concerns about higher education provided increasing impetus for examining the issues of costs and institutional productivity: Perceived declines in quality, concerns about institutional inefficiency and declining productivity, and concerns about rising costs and affordability have all arisen (see, for example, Clotfelter et aI., McPherson and Winston., 1993; Graham et aI., 1995). Partly as a result of such concerns, public resources allocated to higher 39