One experienced teacher had high mortality among the monarchs in her classroom this summer. Hardly any caterpillars survived to become healthy butterflies. Caterpillars died at all stages and chrysalids died. Some butterflies did emerge but died on emergence or survived, but were deformed.
When caterpillars die, I suspect bacterial or virus disease, parasites like tachinid flies, or milkweed food with pesticides. But the mortality did not seem to occur in mass like you might expect with a contagious disease, nor were the caterpillars discolored. (With one virus, they turn black.)
The experienced teacher did try food from a variety of sources, to rule out pesticides. So, I agree that pesticides are not the cause.
The OE parasite doesn't harm caterpillars but causes problems late in the chrysalid stage. Chrysalids die, have difficulty emerging, and the butterflies may be weak or deformed. Butterflies with light cases of OE are not weak but may reveal infection if their abdomens look "dirty," rather than having crisp, black and white stripes. Another thing about OE: normally you would expect only a fraction of the butterflies to be affected, because caterpillars catch it from eating a spore on the egg (from an infected mother) or from a spore dusted on a milkweed leaf. So, in this case, I think we can rule out the OE parasite for two reasons. Too many chrysalids were affected, and caterpillars were affected. Neither are consistent with OE.
Since we ruled out viral and bacterial disease, OE, and pesticides, I asked the teacher about other details of rearing. When she said she had not misted the caterpillars or chrysalids, I figured we had found the problem.
Here's why maintaining high humidity is important. Caterpillars and chrysalids live down in the vegetation within 5 feet of the ground. It's humid in this "microclimate," because all the leaves are transpiring, while the ground also gives off moisture. It's more humid than what we experience outdoors, away from the vegetation. Most indoor environments are air conditioned during the summer, and so are drier than outdoors.
Small animals don't have very large internal reserves of water. I assume that monarch caterpillars get most of their water from the milkweed they eat. But they can't drink the sap because it's toxic--and in fact they cut a semicircle into the leaf to keep the sap away from what they are eating. Probably they get to drink a little rain or dew, but that doesn't happen indoors where we raise them. That's why it's important to mist the eggs and caterpillars several times a day.
The chrysalid has no way to drink, so it (and the emerging butterfly) has to rely on whatever moisture was stored inside when the chrysalid formed. If the humidity around the chrysalid is too low, it might dry out before the butterfly emerges.
On the other hand, it's important to avoid too much humidity. When monarchs are stored inside mostly closed plastic containers, especially if there are leaky floral tubes inside, there can be a problem with moldy milkweed or wet frass.
What's ideal is to raise the monarchs on an open surface, or in a bin without a lid, and let the humidity cycle up and down. When you spray or mist them, the humidity goes up and they can get a drink. Between misting, the humidity drops to a lower level, preventing mold. Put the milkweed in upright jars with lids. Avoid leaky floral tubes.