Arkansas Code
Subchapter 7 - Arkansas Teacher Retirement System — Benefits
§ 24-7-727. Compounded cost of living adjustments

(a)
(1) After July 1, 1999, the Board of Trustees of the Arkansas Teacher Retirement System may compound the cost of living adjustment for all retirants and participants in the Teacher Deferred Retirement Option Plan who have received a monthly retirement benefit for the prior twelve-month period.
(2) The amount of the benefit under this section shall be redetermined effective each July 1, and the redetermined amount shall be payable for the ensuing year.
(3) The simple cost of living adjustment is not payable in the year or years that the board implements the compounded cost of living adjustment.

(b)
(1) The redetermined amount shall be the amount of the benefit payable as of the immediately preceding June 30 increased by three percent (3%).
(2) The redetermined amount shall become the base amount for determining all future cost of living adjustments.
(3)
(A) The board may reverse a compounding of the cost of living adjustment for all retirants and participants in the Teacher Deferred Retirement Option Plan who benefit from the compounding.
(B) If a compounding of the cost of living adjustment is reversed the simple cost of living adjustment shall be used for the year that the compounded cost of living adjustment was reversed and future benefits shall be paid based on the simple cost of living adjustment.
(C) The future benefits of a member shall not be reduced to recover any additional benefits paid from the date the board uses a compounding cost of living adjustment to the date the board uses a simple cost of living adjustment.
(D) If a compounding cost of living adjustment is reversed, the reversal shall be effective at the beginning of the fiscal year.

(4) The compounding cost of living adjustment set by the board shall remain in effect until adjusted or reversed by the board.
(5) The board may change the compounding of the cost of living adjustment by resolution at a meeting of the board subject to the limitations under subdivision (b)(6) of this section.
(6) The board shall not reverse a compounding cost of living adjustment unless the:
(A) Arkansas Teacher Retirement System's actuary certifies to the board that the amortization period to pay the unfunded liabilities of the system exceeds eighteen (18) years; and
(B) Board determines by board resolution that reversal of the compounding cost of living adjustment that occurred in 2009 is prudent to maintain actuarial soundness.

(7) A board resolution reversing a compounding cost of living adjustment under subdivision (b)(6) of this section may include a chart or proxy formula to be applied when a member has a change in his or her benefits due to divorce, remarriage, or the death of the member or the member's spouse.
(8)
(A) The board may phase in the reversal of a compounding cost of living adjustment under subdivision (b)(6) of this section by board resolution.
(B) Any reversal of a compounding cost of living adjustment under subdivision (b)(6) of this section shall be applied at the beginning of the fiscal year.

(c) The benefit provisions provided in subsections (a) and (b) of this section shall be implemented according to rules of the board as is actuarially appropriate for the Arkansas Teacher Retirement System.
(d) Before increasing a benefit under this section, the board shall file relevant information concerning the actuarial appropriateness of the action with the Joint Interim Committee on Public Retirement and Social Security Programs.