(a) If the board of trustees determines, after reviewing the actuarial valuation as of June 30, 1993, that the recommended employer contribution rate for state employees and teachers is less than the rate in effect on June 30, 1993, any excess appropriation contained in the general appropriations act resulting from the reduction in annual contribution requirements for the fiscal year ending June 30, 1994, shall be utilized by the board of trustees as follows:

(1) Any excess appropriations shall first be used to reduce the amortization period of the unfunded accrued liability existing on June 30, 1993, by at least six (6) years, as authorized in § 8-37-304(b) [repealed];

(2) If any appropriations remain after decreasing the amortization period, such appropriations shall be used to calculate the average final compensation of any active or retired member of the retirement system or any superseded system who has service in more than one (1) membership classification and whose benefits are determined pursuant to § 8-36-110 as if all the member's service was rendered in the same membership classification, except for those members covered under §§ 8-35-226 and 8-35-234;

(3) If any appropriations remain after implementing the above average final compensation change, such funds shall be used to increase the base benefit of Group I members, other than members of the general assembly; Group II members; members of the superseded state retirement system; members of the superseded state teachers' retirement system; state employees covered under § 8-39-101; and teachers covered under § 8-39-102, subject to the following terms and conditions:

(A) The amount of any base benefit improvement authorized in this section shall be set by the board, but shall not exceed five percent (5%);

(B) The board shall consider any comments of the council on pensions and insurance prior to adopting a base benefit improvement increase;

(C) Any base benefit improvement increase authorized in this section shall be effective January 1, 1994, and shall apply to both active and retired members in the groups and systems referenced herein;

(D) Any base benefit improvement increase authorized pursuant to this section shall not apply to employees of employers participating in the retirement system pursuant to chapter 35, part 2 of this title, unless the governing body of any such employer, after receipt of the liability information from the retirement system, passes a resolution authorizing the increase and accepting the liability thereof;

(E) Section 8-36-208(a) shall not be construed to prevent any increase in the retirement allowance of a member when such increase is in accordance with this section, nor shall § 8-36-102 be construed to prevent any increase in the retirement allowance of a member retiring prior to January 1, 1994, when such increase is in accordance with this section; and

(4) If any further appropriations remain after implementing the base benefit increase, such funds shall be used to further reduce the amortization period of the unfunded accrued liability existing on June 30, 1993.

(b) The board of trustees shall not adopt changes pursuant to this section which cause the actuarial funding requirement for state employees and teachers to exceed the actuarially determined employer contribution rate established pursuant to the June 30, 1991, biennial evaluation.