The Government says the school payroll system Novopay has improved, but its running costs are still too high.
A Crown-owned company took over the troubled system in October, and the Government said there had been fewer errors than last year in the most recent pay runs.
It said it had budgeted $35 million for operating costs in the current financial year, which is $8 million less than the previous year - but still more than it would like.
The Government said it wants the system to cost about the same as the projected future cost of the Datacom pay service Novopay replaced. Between $18 and $23 million a year.