Schools within schools are large public schools that have been divided into smaller autonomous subunits to create a sense of community and cohesiveness among students and staff. This digest discusses the benefits, drawbacks, varieties, and sources of funding for schools within schools. Designers of these schools seek the advantages of both large and small schools by placing students into small learning communities while using the resources of the larger existing facilities. Benefits include higher test scores relative to larger schools; enhancement of students' self-perceptions, both socially and academically; higher attendance and lower dropout rates; fewer discipline problems; and greater cost effectiveness. Possible drawbacks include emphasizing the sense of belonging over academic rigor, loss of teacher seniority if they are transferred between schools, and possible reduction in funding for equipment. School-within-school types are vertical-house plans, ninth-grade house plans, at-risk schools, career academies and clusters, special curriculum models, newcomer schools, parent-participation plans, advisory systems, and charter schools. Administrators must assess the need for and the purpose of their plan before committing resources for school restructuring. Some funding organizations are the Annenberg Foundation, the Pew Charitable Trust, the Bill and Melinda Gates Foundation, and the U.S. Department of Education's Smaller Learning Communities program. (Contains 12 references.) (RT)