(a) The positions of assistant state superintendents of education and of division directors in the State Department of Education existing on August 23, 1976, shall continue to be covered by the Alabama Merit System law in all matters except the number of positions and the method of fixing the compensation for the performance of the duties of such offices. So long as the incumbents of any such offices existing on August 23, 1976, continue to serve in such positions, they shall be entitled to retain all benefits and immunities to which they are entitled under the Merit System law and shall continue to be entitled to participate in the Teachers' Retirement System upon the same terms and under the same conditions as previously applied to them; provided, that the State Board of Education may determine the salaries of such incumbents.

(b) Upon the vacation of any of the offices designated in subsection (a) of this section by any such incumbents, such positions shall cease to be covered by the Merit System law, and persons to fill such positions thereafter shall be appointed and compensated without regard to said Merit System law and shall serve at the pleasure of the State Board of Education; provided, however, that any such person shall be entitled to all the benefits accruing to state employees who are subject to the Merit System law, including the right to accumulate leave and to participate in the Teachers' Retirement System upon the same terms and under the same conditions as other employees of the State Department of Education.

(c) The State Board of Education, upon the recommendation of the State Superintendent of Education, shall prescribe the amount of the annual salaries for the assistant state superintendents of education and for the directors of each of the several divisions in the State Department of Education, and the salaries so prescribed shall apply whether such employees are incumbents of such positions on August 23, 1976, or are thereafter employed in such positions. In no case may the salary of a director or assistant superintendent be as great as or greater than that of the State Superintendent of Education.

(d) Upon the occurrence of a vacancy in any of the positions designated in subsection (a) of this section or upon the establishment of new positions, the State Superintendent of Education, with the approval of the State Board of Education, shall recruit and employ a person to fill such position. The employment of such person shall not be subject to nor governed by the state Merit System law. Any person so employed shall serve at the pleasure of the State Board of Education and the State Superintendent of Education. The State Board of Education, upon the recommendation of the State Superintendent of Education, may enter into contracts of employment with any such employee, but no such contract shall provide for the employment of such person after the expiration of the term of office of the Superintendent of Education making the recommendation.