Wanganui Collegiate principal Tim Wilbur and Board of Trustees' chairman Tam Jex-Blake would not comment on the funding or class sizes.
Wanganui Girls' College principal Vivianne Murphy said there wasn't enough funding to support the current regime of public schools in Wanganui.
"The concern is about adding more places to the school network in Wanganui out of the pot of money that is available for the schools."
She said the competition would increase when Wanganui Collegiate became integrated.
Wanganui City College principal Peter Kaua agreed, saying the figure of $3 million was triple his annual operational budget.
"Collegiate is a fine school with fine traditions. We have been around nearly as long, as Wanganui Technical College in the old days also had a fine tradition.
"I like that our students and Collegiate students meet each other on the sports field ... there has always been a healthy rivalry ... but no, I don't think this $3 million is right at all ... we all need help."
It's understood that Wanganui Collegiate has fewer than 22 students in each year 9 and 10 class, and fewer than 23 in years 11 to 13.
The school charges $9775 a year for day students in year 9-13 and $19,775 for boarders.
Its campus includes a preparatory school for primary and intermediate-aged pupils owned and run by the Wanganui Collegiate Board of Trustees.
There are 518 students over the two schools.
The school has allegedly faced financial strife since 1991 when it made the move to become co-educational and is now selling land and buildings that housed St George's preparatory school, with a Government valuation of $3.1m.
It includes a main block and classrooms, a swimming pool, tennis courts, playing fields and a headmaster's residence.
Classes for junior students are still offered on the Collegiate campus.
The small class sizes were mentioned in an article in the Wanganui Chronicle this week, which stated that the relatively small classes enabled teachers to know their students well.
An advertisement that ran in the Gisborne Herald and Hawke's Bay Today said the school was now able to offer a "significant fee reduction in 2012 and flexible boarding options".
Quality Public Education Coalition chairman John Minto has criticised the Government announcement that it would spend $22 million to prop up private schools.
Independent Schools Association executive director Deborah James said the average class size this year for the 44 private schools that were members of the association was about 12 students. The largest was 16.
A Post Primary Teachers Association survey last year calculated the average class size in state schools at 25.
The Ministry of Education said it did not collect statistics on average class sizes.
Under the new ratios, the Government will fund teachers at a rate of one teacher for every 15 students in Year 1, one to every 27.5 students from Years 2 to 10, and one to every 17.3 students in Years 11 to 13.
- with Lin Ferguson