THE Rees Government has yet to finalise how parents will pay new fees for children to travel to school on public transport, or when the charge will begin.

As outlined in last week's mini-Budget, the free travel system will be scrapped and replaced with a $90 a year fee for secondary students and $45 for primary students from mid-2009, saving the Government $33 million.

The NSW director-general of Education, Michael Coutts-Trotter, said his department had been charged with its implementation, while the head of the department of transport, Jim Glasson said negotiations are under way.

"I have heard stories that they are looking at a contractor collecting the money," Treasury deputy secretary Mark Ronsisvalle told a parliamentary inquiry.

So far, the sole option that has been ruled out is for private bus companies to collect the money.

Mr Glasson said bus operators would not take the money, although the role may fall to schools, with discussions continuing with the Department of Education. Mr Coutts-Trotter said he did not want schools to be collecting the money.

His main interest, he said yesterday, was in reducing the administrative burden on schools and he suggested application forms for parents be distributed online and through post offices and newsagents.

In answer to a question about whether parents would be able to make the co-payment in instalments, Mr Coutts-Trotter said it would be a single payment. This would probably be due in the second school term to meet the June 30 mini-budget deadline.

"The timing is still fluid," he said. Asked if he was supportive of the changes to the scheme, he said only that: "My job is to implement the Government's policy."