Not all teachers are created equal. Your pro small classes point applies if all teachers are just as good. However if one teacher teaches 60,000 people, you can pick the best teacher in the city. If one teacher teaches 20 then 20 students get the best teacher, and the other 59,980 dont. Instead of just hiring the top 1 teacher, you must now hire the top 3,000 teachers. The average skill of the top 3,000 will heavily affect the average level of teaching of the whole 60,000 students.

If you doubled all class sizes you might be able to double the quality of teaching.