(a) Commencing October 1, 2006, there is provided a cost-of-living adjustment (COLA) in the amount of seven percent of the current gross benefit, but not less than twenty-five dollars ($25) per month to each person currently receiving benefits whose effective date of retirement was prior to October 1, 2005, for purposes of receiving benefits, and to certain beneficiaries of deceased members and deceased retirees currently receiving survivor benefits, if the effective date of retirement or death for the deceased retiree or deceased member was prior to October 1, 2005, for purposes of receiving benefits from the Teachers' Retirement System.

(b) Any future survivor allowance shall be adjusted as provided in the members' original option selection for those eligible retirees who have selected a monthly survivor allowance payable to a designated beneficiary upon the death of the retiree, or otherwise provided by law in the case of a qualifying member who dies prior to April 5, 2006.

(c) Any person who receives benefits under the Medicaid program and whose eligibility for the benefits would be impaired by the cost-of-living increase provided by this section shall not be entitled to receive the increase. Any person who shall subsequently apply for benefits under the Medicaid program and who would have his or her eligibility to receive benefits impaired by the cost-of-living increase provided by this section, shall not be entitled to receive the increase after the date that the member files application for benefits under the Medicaid program.

(d) The Board of Control of the Teachers' Retirement System shall determine annually the amount required to pay the cost of the increased allowance provided under this section, and shall notify the chief financial officer of each employer of the per centum rates of earnable compensation of the members required to be paid to the retirement system. Each employer of members of the Teachers' Retirement System shall pay on account of the increases provided in this section in the same manner and from the same sources of funds as provided in Section 16-25-21, it being the intent of the Legislature that the cost of providing the increase in this section shall be distributed from all funds in proportion to the salaries paid therefrom for active members.