(Here I shall just interject that there are now only three such states in the real world, and one of them is full of the men and women of religious orders.)
What do I mean?
Well, if you want economic self-sufficiency, you need a huge piece of land with natural resources. But no such piece can accommodate populations as dense as 7500 people/sq km or higher. So 'independent' city-states are politically independent and practically (i.e. economically in the main) interdependent. That is, they need to trade in order to sustain their independent highly-dense population.
This again means that you need to make people economically useful quickly. Hence, mass education at compressed time and resource rates. There is really not much choice unless you wish to spend more money (positively or in terms of marginal costs to the system).
Enter the armchair analysts of Atlantis. They say, "Make the class sizes smaller and all will be well; we need a better teacher:student ratio!"
Well, that simply means you spend more per class and have more classes. More classes = more classrooms and less open space, even if the classrooms are smaller. Labs, lecture theaters, research spaces of all kinds, art rooms — all these will need to be re-planned, if not rebuilt. The total cost of making all classes smaller is too high unless the remaining people decide to work a lot harder for less pay.
Not quite. More armchair analysis later, and it is spoken, "Then our value system is horrible and people should work less hard for more pay!"
This, from the intelligentsia. The solution is really simple: all these people should just emigrate to a bigger country, not a city-state. Some place like Finland is good; it's 75% forest and has the cheapest electricity in Europe simply because it has four nuclear reactors and some uranium mines. Also more fresh water per capita than anyone can drink.