The aim of the article is to analyse the dual role of Estonian local governments and their associations – as providers of educational services and as customers of educational services. This is primarily a qualitative case study, which employs comparative and historical methods. Legislation, case law and relevant scientific literature, as well as practical experiences, are incorporated in this analysis. The key issues considered are the inadequacy of the legal framework, as well as insufficiency of coordination and financing. The article consists of three parts. Firstly, managing general education as the most important task of the Estonian local government will be analysed from a legal perspective. Secondly, the role and functions of local governments and their associations in providing various educational services will be analysed. The role of the state and local governments in establishing and maintaining basic schools and upper secondary schools are of key interest. In particular, their financing model. Thirdly, in-service training of local governments in Estonia and its situational aspects are analysed. Finally, the authors make suggestions on how to resolve the identified problems in the complex sphere of local governments and their associations as providers and customers of educational services.