This paper examines the expenditure patterns of public doctorate-granting institutions, the tradeoffs made among competing financial needs by these institutions, and how well these expenditure patterns may validate the Carnegie classifications of the examined institutions. The paper presents data collected from 133 institutions in the Research I, Research II, Doctorate-granting I, and Doctorate-granting II Carnegie classification groups, including the following financial variables: total fiscal year 1988 educational and general expenditures and mandatory transfers (E&G) and present E&G in each of the following areas: instruction, research, public service, academic support, institutional support, student services, and operation and maintenance of plant. Using Pearson correlation coefficients, the relationships among competing expenditure allocation choices are shown, and through the use of discriminant analysis, these allocations are used to validate the Carnegie classifications of the institutions, as well as to determine how the institutions would be reclassified into other Carnegie groups based solely on their spending patterns. Study results indicate that only research and public service are positively correlated with total E&G expenditures; all other allocation ratios show negative relationships with E&G. The relationship between instruction and research showed the strongest negative correlation between any two variables. Percent spent on instruction showed positive relationships with student services, institutional support, and plant operation. Using spending patterns to validate Carnegie classifications resulted primarily in reclassifications from Research II and Doctoral II categories into Research I and Doctoral I categories. (Contains 14 references.) (GLR)