"Small Schools and Savings" rebuts the presumption that capital costs of school planning and construction render small schools uncompetitively expensive. Specific options are outlined that can help small schools be cost effective. The false logic of borrowing economies-of-scale arguments from the factory model and applying them to building schools is contradicted through an investigation that shows countervailing economies in a flexible, adaptive approach to school planning, siting, and organization. Specific potential savings opportunities that are advocated center on (1) the use of smaller sites; (2) renovation of an existing abandoned or underused building; (3) collaboration with other public agencies to incorporate smaller schools in multiuse facilities; and (4) integration with private or public sector construction or renovation projects or negotiation to include a school in construction or renovation of low-rise housing. It is unnecessary and inconsistent with new insights about urban education to continue building new, too-large buildings dedicated to schools. Two appendixes consider school size and achievement and findings from a Chicago (Illinois) study, and a third contains a 72-item bibliography. (SLD)