This short paper discusses the advantages of and outlines key design issues for creating charter districts. The design issues are divided into three categories representing the three central elements of the environment the districts are trying to create for their schools: the opportunity to perform, incentives to perform, and capacity to perform. The paper also explains eight key questions and discuses options for addressing them: (1) How much and what kinds of autonomy should schools have? (2) How much emphasis should a charter district place on authorizing new schools? (3) How should a charter district convert existing schools to charter or contract schools? (4) How should a charter district hold schools accountable for results? (5) How should choice for families work? (6) How can a charter district help ensure a supply of high-quality schools? (7) How should district leaders distribute funding to schools in a charter district? (8) What is the best role for the central office in a charter district? The report concludes with a section on some of the challenges of implementation: the legal, political, and technical hurdles facing district leaders as they create charter districts. (Author/WFA)