"We are concerned about the depth and breadth of programmes that a small secondary department will be able to offer, particularly in years 11-13, and that this may limit the learning opportunities and career pathways for senior students," the report said.
Destiny spokeswoman Anne Williamson said the school taught the internationally recognised Cambridge curriculum.
Core subjects including English, maths and science were offered at senior levels.
"If we're getting results and they're in line with the Ministry of Education's strategic plan, and we can help your overcrowding, why would you not want us in the state system?"
Officials were also concerned about the high cost of managing and monitoring the school if it joined the state network with just 51 students on the roll.
Last year the private school received $280,000 in Government funding. If integrated this would rise to at least $3 million a year and officials questioned the benefit to local families.
"Integration may reduce costs to parents but the provision of choice to a wider number of parents will be limited by site constraints," the report stated.
Parents pay $65-$85 a week to send their children to Destiny's South Auckland school.
In its failed application the school claimed integration would reduce fees so more families could afford to enrol their children.
But the ministry said the ability of the school to grow was limited by council resource consent, which capped its roll at 350.
The ministry was also concerned about how granting the application would look to other private Christian schools it had turned down.
Neighbouring Manurewa schools had voiced objections to Destiny becoming state-integrated and the ministry was concerned approving an application would jeopardise widespread support for an education strategy blueprint being drawn up for the area.
