(a)(1) There is hereby provided, commencing October 1, l985, to each person, whose effective date of retirement for purposes of receiving benefits from the Teachers' Retirement System, is prior to October 1, 1984, and who is receiving an allowance therefrom, a cost of living increase of $2.00 per month for each year of creditable service attained by said retired member.

(2) There is hereby provided, commencing October 1, 1985, to each person, whose effective date of retirement for purposes of receiving benefits from the Employees' Retirement System, is prior to October 1, 1984, and who is receiving benefits therefrom, a cost of living increase of $2.00 per month for each year of creditable service attained by said retired member provided that only those retired members of the Employees' Retirement System whose participation in the system was based on Section 36-27-6 and whose employer at the time of his retirement was a local board of education or a state-supported institution of higher education shall be eligible to receive the increase provided herein.

(b)(1)a. There is hereby appropriated from the Education Trust Fund to the Teachers' Retirement System of Alabama $13,034,234.00, for the fiscal year beginning October 1, 1985, or such amounts as are necessary to carry out the provisions of this section as it relates to the Teachers' Retirement System.

b. For each fiscal year thereafter, the Board of Control shall determine the cost of benefits under this subdivision as the percentage rate of earnable compensation of members required to be paid to the Teachers' Retirement System. The employers' payments on account of the increases provided in this section shall be paid in the same manner and from the same source of funds as is provided in Section 16-25-21, it being the intent of the Legislature that the cost of providing the increases provided for in this section shall be distributed from all funds in proportion to the salaries paid therefrom for active members.

(2)a. There is hereby appropriated from the Education Trust Fund to the Employees' Retirement System $230,182.00, for the fiscal year beginning October 1, 1985, or such amounts as are necessary to carry out the provisions of this section as they relate to retired employees of local boards of education and state institutions of higher education who are retired under the Employees' Retirement System.

b. For each fiscal year thereafter the Board of Control shall determine the amount necessary to fund the cost of benefits provided in this subdivision and the cost thereof shall be collected as provided in paragraph b. of subdivision (1) of subsection (b) above and transferred from the Teachers' Retirement System to the Employees' Retirement System.

(3) The benefits provided herein shall continue from year to year only so long as the Legislature shall continue to fund the cost of said increases.

(c) Any person who receives benefits under the Medicaid program and whose eligibility for such benefits would be impaired by the cost of living increase provided herein shall not be entitled to receive said increase. Any person who shall subsequently apply for benefits under the Medicaid program and such persons eligibility to receive benefits is impaired by the cost of living increase provided herein, shall not be entitled to receive said increase subsequent to the date that the member files application for benefits under the Medicaid program.

(d) The provisions of this section are supplemental. It shall be construed in pari materia with other laws regulating and providing for the payment of retirement benefits to the retired members of the Teachers' Retirement System of Alabama and certain members of the Employees' Retirement System of Alabama; however, those laws or parts of laws which are in direct conflict or inconsistent therewith are hereby repealed.