New Jersey has just 21 counties, but it has more than 600 school districts. Although merging small districts is a problem everywhere, New Jersey's system is so out of whack that it borders on comedy. This year, the state took what it thought was an easy first step: closing districts that don't actually operate any schools. But even that has proven to be controversial.

Several other states allow what are known as "non-operating districts." These have school boards and part-time staffers who take care of paperwork--largely writing checks to a neighboring district for educating the kids they send over. But they have no students and no schools. "This was a prime target to go after," says Lucille Davy, the state education commissioner. "Clearly, it's not efficient to have a whole system in place, with employees who are not educating any children."

But when the state moved in July to shut down half of its 26 non-operating districts, it ran into surprising resistance. Residents of those districts groused that their property taxes would shoot up because the funding formula would switch from a per-pupil calculation to one based on home values. "When you look at the individual situations," says Frank Belluscio, spokesman for the state school board association, "you realize that most of these arrangements are in place because it was cheaper to send their students to another district."

The state is allowing the non-operating districts to phase in tax increases over a multi-year period. State Representative John Burzichelli, a sponsor of the legislation that led to the closures, says that the increased bite these communities are now facing reflects the fact that they have been enjoying a tax haven. Writing a check to cover an individual pupil's education didn't reflect the neighboring district's full costs, including its administrative burdens. As taxes rise within the shuttered districts, they should go down by a concomitant amount within the districts that actually hold classes. And the costs of staff and paperwork in the closed districts go away.

The question now is whether this first step will help persuade voters to accept the broader set of school consolidations they'll vote on next year--or whether the public will be scared away from trying anything more ambitious. "One message we're getting very clearly from the people of New Jersey," Burzichelli says, "is that they want reform, but they don't want change."