Alentejo, a sparsely-populated region in mid-south Portugal, has among the fastest decline in population and highest ageing rate across large OECD regions. This is expected to continue in the coming decades, putting pressure on local finances, which are already under severe strain because of the pandemic. The costs needed to provide good quality services in places with smaller and more dispersed populations are higher due to their smaller economies of scale and scope, higher transportation costs, and greater difficulties in attracting service professionals. Exacerbating this are important gaps in Alentejo’s broadband infrastructure and digital skills, especially in its rural areas, creating bottlenecks for public authorities looking to deliver some public services digitally. Alentejo is not alone, many other OECD regions face similar challenges, and, like Alentejo, they will need to develop forward looking policy responses that can embrace the opportunities provided by digitalisation, as well as other innovative solutions, including through better coordination across levels of administration that can help overcome policy silos. Focusing on education, this study provides valuable lessons for regions and all levels of government experiencing decentralisation and facing demographic challenges.