The delay in creating a new streamlined education body will see £21m in efficiency savings squandered, the Education minister claimed.
Caitriona Ruane confirmed her plans for a transitional management arrangement that will see the region's education boards continuing to operate, albeit in a radically downsized form.
ESA had been due to take over the work of the five boards and other schools and exams bodies in January, but the minister claims the DUP has blocked her proposals to modernise the system.
She told the Assembly that reducing the membership of four of the five boards from 140 to 60 would help cut some bureaucracy needed to make up the funding gap.
"Between this year and next more than £21m has already been taken out of the education budget and thus any delay in establishing ESA has a direct impact on education services - this is something we simply can't afford to let happen," she told members.
"The longer the establishment of ESA is put off the longer education will have to await the benefits and absorb the financial loss.
"The planned savings from ESA must be made, so we face a simple, but stark choice: savings can be made by cutting bureaucracy; or by cutting back on teaching and learning. I intend to cut bureaucracy and raising educational standards. Both are vitally important."
The current Education and Library Boards are made-up of 35 members each, including large numbers of councillors.
The Belfast board will be cut to ten members, the Southern board will be cut to 15 members, the Western board will be cut to 12 and the North Eastern will be reduced to 23.
The minister said she is also examining the membership arrangements for the Council for Catholic Maintained Schools and exam body the Council for Curriculum Examinations and assessment.
The downsized boards will work closely with the two officials already recruited to lead the new ESA.
'Failure'
The DUP has cited concerns over the ESA and in particular its implications for predominantly Protestant state controlled schools.
But DUP chair of the Stormont Education Committee said the failure to establish ESA was not his party's fault.
"The minister cannot deflect blame for her failure away towards the DUP," he said.
"The job she has is no different to any other legislature, where it is the minister's responsibility to build support and guide bills through the legislative process."
Ulster Unionist ministers Sir Reg Empey and Michael McGimpsey said her statement to the house was an "incredibly worrying development".
"At no time has Minister Ruane sought the support of the Northern Ireland Executive for her 'transitional governance' plans for education," they said in a joint statement.
"This is despite the Ministerial Code requiring a minister to bring any cross-cutting and 'significant or controversial' matters to the Executive."
The Association of Chief Executives of the Education and Library Boards welcomed the minister's statement.
© Press Association