A feasibility study conducted by the California Postsecondary Education Commission to evaluate alternative means of developing cost-of-instruction data is presented. Five areas of legislative interest in cost-of-instruction information are identified, and issues pertaining to the comparability of cost data and to the accuracy of the data in representing specific educational activities are examined. Results of surveys on other states are analyzed in terms of how the states develop cost-of-instruction data, and how costs are determined, aggregated, and used. The involvement of California's legislative and executive branches in cost-of-instruction studies since 1961 is reviewed, and the impact of program budgeting upon state support for public postsecondary education is considered. The concept of costing, the National Center for Management Systems (NCHEMS) costing system, and four specific cost-of-instruction methodologies are examined. The limitations and assumptions used in developing cost-of-instruction alternatives are described, along with six specific cost-of-instruction alternatives for California. The origin and characteristics of the California Fiscal Information System is examined, and comparisons are made between this program and other alternatives. Two alternatives that represent the optimal cost/benefit relationships, and an alternative that is costly but provides the best data quality and quantity are identified. Various supplementary materials, such as an overview of the NCHEMS classification structure, are appended. (SW)