Gov. Rendell and state Sen. Vince Fumo rescued 36,000 schoolchildren from the SEPTA-transfer court battle by announcing yesterday that all seventh-through-12th graders who live more than 1 1/2 miles from school will ride for free with a new weekly transit pass.

But the fight over paper transfers for adults rolls on.

Yesterday's announcement includes 7,200 parochial, private and charter schoolkids.

Students who live within 1.5 miles of school will pay a reduced rate of $14.45 for the new pass.

Fred Farlino, the school district's interim chief operating officer, said that he expects "very little cash business" because most students within 1.5 miles of school "walk, bike or carpool."

He also doesn't "see much chance for a black market in weekly passes. Who would buy them?"

Farlino said that "the devil is in the details" of distributing the new passes and that the district is working on a "very aggressive" schedule to get them to students by the week of Sept. 10, when schools open.

The new passes eliminate the need for paper transfers among middle- and high-school students. Younger students ride yellow school buses for free.

But the new passes did not end the city's effort to convince a Common Pleas judge that SEPTA's plan to eliminate 60-cent paper transfers violates federal civil-rights law by imposing disproportionately higher fares on minority and low-income riders.

"As far as I'm concerned, it's full steam ahead," said City Solicitor Romulo L. Diaz Jr. yesterday.

"We've got a resolution apparently with regard to schoolchildren that we think is very positive," he said, "but on the other hand, we've got 55,000 adult riders still potentially adversely affected by the elimination of paper transfers."

Diaz said that a SEPTA official testified that eliminating paper transfers would save $10 million annually.

"But now I hear that SEPTA will pay $3 million to the school district to administer the new weekly passes," Diaz said. "Doesn't that undercut what SEPTA said about saving $10 million? You can't have it both ways."

Diaz said it is "time for SEPTA to announce that eliminating paper transfers did not make sense for schoolchildren and it doesn't make sense for adult riders."

He said that SEPTA will get $50 million more from the state than the $100 million it needed to plug its budget hole, so the transit agency has the money to give kids a free ride to school and to continue giving adult riders the 60-cent paper transfers instead of making them pay two full fares for a single trip.

Common Pleas Judge Gary DiVito may decide the SEPTA transfer case as early as Friday. *