"The public will be paying more for less and it is going to be difficult for local authorities to face," Mrs Allan told the association's meeting at Jordanhill campus of Strathclyde University.
She blamed the "blight on innovation" on a deteriorating relationship with the Scottish Office, the worst financial settlement on record and the drive for greater accountability. Only Fife Council had taken time to reflect on its structures and services because it was an "aggregating" authority that had grown following the merger of districts and region.
Almost all other councils had gone back to traditional organisation. In the present climate that was not surprising. "The fear of failure is there and that councils will not be able to deliver. Few people are looking past April 1. There is a real feeling of short-termism," Mrs Allan said.
Councils had to redefine their role and become more flexible and responsive, particularly with the prospect of a Scottish assembly. Little had changed in education departments from the previous reorganisation in 1975 through to the 1990s.
Local authorities should be the "glue" in fragmented provision, Mrs Allan said, and develop the local networks communities needed.
But she warned that all authorities were unlikely to be able to deliver a full range of services such as special education. Councils would have to co-operate with neighbouring authorities and with the private and voluntary sectors.
Jim Goodall, head of educational development in Clackmannanshire, said small councils such as his own could not arrange staff development or minority subjects like Gaelic without buying in services and co-operating with other councils and further education colleges.