The process of decentralization in SR coerces most of the municipalities to efficient banding together. Inter-municipality cooperation presents one of the background assumptions for more effective administration of transferred competencies under the parallel conditions of solving the problems of small municipalities. It is obvious, that size of the municipality highly influences structure and efficiency of public expenditures. SR has to make close analyses about relations between effective size of self-governing entities and range and structure of provided public services. Overall efficiency of local authority expenditures can be discussed only in the terms of establishment of economically rationale number of joined municipal authorities. The future development of inter-municipality cooperation will be influenced by the next steps of modernization and decentralization of public administration.