The purpose of this work is to study the problem of local government formation and evaluate the effectiveness of local government strategies. Modern government institutions in the territory of the North Caucasus (based on the data from Kabardino-Balkaria and Karachay-Cherkessia) are analyzed as the studied material. The analysis of this paper was based on the results of field studies that were performed in 2014-2018 within the scope of the North Caucasian Complex Expedition from 2014 till 2018. Modern institutions of self-governance at the local level, the dynamics of transformation of state and public relations, as well as problems and prospects for improving local self-governance in the context of strategies for the development of rural settlements are identified.