OBJECTIVE: Preliminary studies suggest that during the 1980s, spending for community mental retardation services in the United States may have grown much more rapidly than spending for community mental health. The primary objective of this study was to test empirically the validity of this thesis on a national basis. An additional objective was to determine why such a distinction in community spending patterns might have evolved nationally. METHOD: The study used states as the units of analysis and employed a five-factor hierarchical regression to predict variance in mental health and mental retardation spending. Factors were state size, state wealth, degree of federal assistance, state civil rights activity, and strength of consumer advocacy groups. Strong roles for the civil rights and consumer advocacy factors were hypothesized. A collateral opinion survey in the 10 states exhibiting the greatest within-state difference in community mental health and mental retardation spending was also completed. RESULTS: Community mental retardation spending grew nearly four times more rapidly than community mental health spending in the 1980s. The consumer advocacy and civil rights factors were strongly associated with spending for community mental retardation services in the states, but these factors did not predict spending for community mental health services. CONCLUSIONS: Study recommendations included strengthening mental health family and consumer advocacy groups in the states and promoting systematic exchange between the mental health and mental retardation fields through joint state planning initiatives, studies, and conferences. The need for Medicaid reform is a unifying theme in both the mental health and mental retardation fields.