A teachers union says there should be an inquiry into what went wrong at Wanganui Collegiate.
The 158-year old boarding school is to become a state integrated school from next January, which will increase its government funding by several million dollars a year and force it to lower its fees.
The New Zealand Educational Institute, which represents primary school teachers, is questioning the move.
National Secretary Paul Goulter says a substantial inquiry would allow the public to have complete confidence the Government's move to give more money to an exclusive private boarding school is the proper one.
Education Minister Hekia Parata says quality of education was the foremost consideration in her decision to allow Collegiate to become a state school.
Mrs Parata also considered the need for a diversity of educational options for parents, and what the change would mean for Whanganui and its economy.
Wanganui Collegiate charges nearly $10,000 a year for day students and almost $20,000 for boarders, as well as uniform costs of about $1500.
The Ministry of Education says the school has about 412 students and will be allowed to grow to 430.
The figure will be critical for local schools and lower North Island boarding schools, which have expressed fears Wanganui Collegiate will take their students if it is allowed to grow too much.
Teachers' union outraged
The secondary school teachers' union says it is outraged by the Government's decision.
The Post Primary Teachers Association says Whanganui does not need any more state schools and Wanganui Collegiate should have been left to fail.
It says the school will lower its fees and take students and funding away from existing state schools.
The only compulsory fee it will be allowed to charge is an attendance due to cover property costs.
However, even as an integrated school Wanganui Collegiate might not be cheap.
Other integrated boarding schools charge between $260 and $700 a year in attendance dues, but thousands of dollars more in other fees.
Whanganui mayor Annette Main says Wanganui Collegiate, which has been in the district for more than 150 years, has a positive impact on the city's reputation and the decision secures its future.