1. (a) The amount of compensation credited by TRS in each of the last three school years prior to retirement may not exceed the amount of compensation allowed for the preceding school year by more than 10% or $10,000, whichever is greater.
2. (b) The base line amount used to determine the amount of allowable compensation in the third school year prior to retirement is the greater of either the amount of compensation for the fourth school year prior to retirement or the amount of compensation for the fifth school year prior to retirement. If there is no compensation for either the fourth or fifth school year prior to retirement, the base amount is the earliest salary credited in the three school years prior to retirement. If the member does not have credited compensation in at least three school years during the last five school years prior to retirement, the limit in subsection (a) of this section does not apply.
3. (c) The amount of allowable compensation in the third year prior to retirement is the greater of 110% of the base line amount or the amount of compensation in the base year plus $10,000. The amount of allowable compensation for each subsequent year is the greater of 110% of the allowable amount for the previous year or the allowable amount for the previous year plus $10,000.
4. (d) Increases in compensation due to a change in employers, a change in duties, additional duties or work, legislation, or federal or state law are not subject to the limits in subsection (a) of this section and the allowable amount of compensation for the remaining years prior to retirement is calculated using the increased amount.
5. (e) Only compensation earned after the 2005-2006 school or contract year will be subject to the limit on increases described in this section. Salaries earned during the 2005-2006 school year and after will be used in the calculation of the base amount.
6. (f) TRS will adjust a member's annual compensation at the time of retirement to comply with the limit on creditable compensation in subsection (a) of this section and refund the member contributions on the amount that exceeds the limits described in this section. The refund will be made after the date on which TRS makes the first annuity payment.
7. (g) No adjustment in compensation will be made if the limit on compensation increases would not affect the calculation of the member's retirement benefit.
8. (h) If compensation is adjusted under this section, the member may provide additional information in the form of written documentation to demonstrate that the compensation should be allowed. TRS makes the final determination regarding whether compensation is allowed in the member's benefit calculation.
9. (i) Upon the request of TRS, the employer shall provide documents or records evidencing the basis for the increased compensation.

Source Note:The provisions of this §25.31 adopted to be effective January 31, 2006, 31 TexReg 553.