Break up the problem into two parts:
First consider the ball on the bottom. Follow its path disregarding the ball on top all the way down to hitting the ground and find the rebound velocity with which it will strike the upper ball instantaneously.
Then move on to the upper ball which is a bit more tricky. You have to find its velocity in the downward direction just as the bottom ball hits the ground and then combine these two velocities in an elastic collision. Find the velocity that the small ball leaves the collision with, and then solve for how high the ball goes with this initial velocity starting from the point of collision (not ground level!).