A multivariate analysis was done to determine the relative importance of facility, resident, and community characteristics to expenditures. Facility factors associated with higher expenditures included ownership, facility size, facility services, and location. Individuals with a greater number of activity of daily living limitations, developmental disabilities, and more severe levels of mental retardation had higher expenses. Findings could improve our understanding of the costs of long-term residential care, assisting us to economically and effectively bring this population into the community. Data used are from the 1987 National Medical Expenditure Survey Institutional Population Component.