One insider described the mood among staff as "one of desperation" and crisis talks have taken place to plan a fightback ahead of Tuesday's full board meeting.
At its peak, the showpiece centre initiated by Michael Forsyth, the former Scottish Secretary, attracted 41 pupils with cerebral palsy but numbers have slumped to fewer than 20 and nine toddlers. All but two of the babies are on free places and most children now come from neighbouring councils, invalidating its national remit.
The Scottish Office, which ploughed in building and start-up costs, is maintaining a close interest and is believed to be questioning an annual grant of more than Pounds 400,000. Local authorities, the other principal funders, are equally concerned.
Bart McGettrick, principal of St Andrew's College of Education and a leading board member, dismissed talk of a crisis. "The tragedy is that this is an internationally renowned centre that is suffering because education authorities and health boards cannot afford it. They have got priorities and they do not see this as their main priority," Professor McGettrick said.
The irony was that the number of young children with cerebral palsy who could benefit by the Craighalbert experience was increasing, he said. "The board will have available to it measures that will certainly ensure the centre's viability in the foreseeable future."
Modifying the Craighalbert conductive education approach may be one option. The board is likely to ratify a revamped marketing strategy aimed at councils, health boards and parents.
The centre has been vulnerable since local government reform. Councils questioned its professional role and are favouring their own special schools, many of which have integrated aspects of the conductive approach.
One council official said: "The fashion for conductive education has gone and parents are happier if their child cannot go to a mainstream school to go to a local special school. Parents do not want their child travelling, say 30 miles, in a taxi across the city."
Another said: "Conductive is not the buzz word it was five or six years ago."
Margaret Burnell, senior depute director of education in East Ayrshire and external evaluator of the centre's outreach project in Dundee, said: "There is no doubt children benefited by the provision at Craighalbert but there were areas we were concerned about - travel, distance and curriculum issues. Long travelling distances were an issue in terms of the child's interest and in cost to the council."
Residential facilities for children and parents have never been fully used because of family pressures.
A damning Scottish Office report last year, by Gilbert MacKay of Strathclyde University, reinforced councils' doubts. But Professor McGettrick said criticisms, particularly over curriculum content, had been more than dealt with.