The nature of expenditure distinguishes between current and capital expenditure. The resource category refers to service provider (public institutions, government-dependent private institutions, and independent private institutions, i.e. both educational and other institutions). These expenditure figures are intended to represent the total cost of services provided by each type of institution, without regard to sources of funds (whether they are public or private).

The expression "expenditure of or for (...) institutions" is used to make clear that these expenditure include both expenditure by the institutions themselves (e.g. salaries paid by fiscally autonomous university) and expenditure by governments on, or on behalf of, the institutions (e.g. salaries paid by a national education ministry directly to the individual teachers employed in public or private schools). The classification between public and private institution is made according to whether a public agency or a private entity has the ultimate control over the institution. For private institutions, the distinction between government-dependent and independent refers only to the degree of a private institution's dependence on funding from government sources: a government-dependent private institution receives 50% or more of its core funding from government agencies or one whose teaching personnel are paid by government agency. An independent private institution is one that receives less than 50% of its core funding from government agencies and whose teaching personnel are not paid by a government agency.

The distinction between current and capital expenditure is the standard one used in national income accounting. Current expenditure is expenditure on goods and services consumed within the current year, i.e. expenditure that needs to be made recurrently in order to sustain the production of educational services. Minor expenditure on items of equipment, below a certain cost threshold, is also reported as current spending. Current expenditure is broken down into expenditure on compensation personnel and expenditure on other resources. Capital expenditure is expenditure on assets that last longer than one year. It includes spending on construction, renovation and major repair of buildings and expenditure on new or replacement equipment. The total funds received by educational institutions from all sources may not be precisely equal to total expenditure in the reference period. This is because the institutions have either added to or reduced their fund balances during the period in question.