This research paper sought to determine whether smaller sized schools decrease student alienation and increase program diversity both within the school and compared to others. Hypotheses tested were: (1) participation in small work units positively affects teacher task interdependence resulting in greater teacher interaction; (2) teacher interdependence results in increased differentiation among students and decreased routinization of student assignments; (3) differentiation and routinization affect student perceptions of their classroom environment. The data base was obtained through the administration of a teacher survey and a student questionnaire to participants in the Alum Rock Voucher Demonstration, in which participating schools are organized into smaller educational"mini-schools." The data is analyzed and discussion presented concerning each area of investigation. Conclusions presented are that: (1) teacher interaction, while more prevalent in smaller work groups, is more a function of task structure than of work unit size; (2) classroom organization is also affected more by the complexity of the task structure than the unit size; and (3) students seemed to enjoy class more when they are part of a smaller educational unit, though the benefits of small groups do not flow directly from class size but from a chain of causation in which small groups foster a more complex task structure, resulting in greater teacher interaction, differentiation, and less student routinization. (MB)