The notion of local district capacity needs to be rethought in light of the extraordinary demands for learning imposed on teachers and others by the current wave of reform in science, mathematics, and other subjects. In this article, a district's capacity to support ambitious instructional reform is viewed primarily as a capacity to learn the substantive ideas at the heart of the new reforms, and to help teachers and others within the district to learn these ideas. Interview data from an 18-month investigation of instructional policymaking in nine Michigan districts demonstrated local variability in capacity to implement reforms that are aligned with state and national reforms. Three factors that significantly impact a school district's capacity for reform include human and social capital, and financial resources. For example, districts that are rich in human and social capital will grow richer in the human capital that matters most--the knowledge, skills, and dispositions that teachers need to teach challenging subject matter effectively to a broad array of students, creating a social gap. This new version of the widening gap between districts that are rich and those that are poor in human and social capital poses a major educational policy challenge. (RT)