Current school finance policy in Nebraska rests on the premise that higher costs due to small school size should not be subsidized by state funds unless there is no consolidation alternative. This report aims to reframe the school size debate by demonstrating the excellent performance of Nebraska's small schools in high school completion and postsecondary enrollment rates and by offering an alternative measure of cost efficiency that includes student outcomes. Analysis of school data from 1991-92 through 1994-95 and postsecondary data, 1990-98, reveals the following: (1) high schools with less than 100 students had average graduation rates of 97 percent, compared to 85 percent statewide; (2) high school completion rates were lowest for high schools whose size was considered most"efficient" (600-999 students); (3) Nebraska postsecondary institution enrollment rates were 73 percent in counties with average high school enrollments of less than 70 students and 70 percent in counties with average high school enrollments of 600-999 students; and (4) the percentage of students completing high school and enrolling in a Nebraska college was 25 percent higher for counties with the smallest schools, compared to counties with the largest schools. The so-called "inefficiencies" of small schools are greatly reduced when calculated on the basis of cost per graduate, and virtually disappear when the social costs of non-graduates and the positive societal impact of college-educated citizens are considered. Recommendations for the Nebraska school funding formula are offered. (SV)