Section 24-7-736 - Calculation of final average salary - Definition(a) Compensation in excess of the limitations set forth in the Internal Revenue Code of 1986, 26 U.S.C. § 401(a)(17), as it existed on January 1, 2011, shall not be used for purposes of calculating final average salary on which benefits under the Arkansas Teacher Retirement System shall be based.(b)(1) The limitation on compensation for an eligible employee shall not be less than the amount that was allowed to be taken into account under the system as in effect on July 1, 1993.(2) As used in subdivision (b)(1) of this section, "eligible employee" means an individual who was a member of the system before the first plan year beginning after December 31, 1995.(c)(1)(A) The Board of Trustees of the Arkansas Teacher Retirement System shall set the applicable number of years to be used in computing final average salary for retirement benefits at not less than three (3) years and not more than five (5) years.(B) Before reducing the applicable number of years to be used in computing the final average salary, 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 for review by the Joint Interim Committee on Public Retirement and Social Security Programs.(2)(A) Full and partial service years that are recorded as service credit shall be used in the calculation of the final average salary in accordance with rules promulgated by the board.(B) If the member does not have full service years for the total years of service used in the calculation of final average salary, then the board may establish by rule a fair base salary for a member's final average salary for purposes of comparison under subdivision (c)(4) of this section.(3) If a member has less than the minimum number of years of credited service required for the final average salary formula, the final average salary of the member shall be the total salary paid to the member for his or her years of credited service divided by the member's total credited years of service.(4)(A) If a member has at least the minimum number of years of credited service required for the final average salary formula, the applicable number of highest service year salaries shall be ranked from lowest to highest.(B) The lowest service year salary in the ranking shall be the base salary.(C) The next-highest-ranked service year salary shall be compared to the base salary.(D)(i) The next-highest service year salary in the calculation of final average salary that is less than eight (8) years from the base salary year shall not exceed the base salary value plus the anti-spiking amount unless the next-highest year's value is less than or equal to the anti-spiking percentage of the base salary.(ii) Subdivision (c)(4)(D)(i) of this section shall not apply to a partial service year or a fiscal year immediately following a partial service year.(E) After comparison of the base salary to the next-highest service year salary to meet the requirements of subdivision (c)(4)(D) of this section, any required reduction to the next-highest service year salary shall be made.(F) The next-highest service year salary, with any required reduction, becomes the new base salary to compare to the next succeeding highest service year salary in the ranking until all service year salaries in the ranking have been compared.(G) The total value of the base salaries shall then be divided by the applicable number of years to be used in computing final average salary.(d) The system may settle any dispute concerning an employee's salary for purposes of the system.(e) The board may adjust the final average salary calculated in accordance with subsection (c) of this section by board resolution provided that:(1) The anti-spiking percentage under subdivision (c)(4)(D) of this section is set no lower than one hundred five percent (105%) per year and no higher than one hundred twenty percent (120%) per year; and(2) The anti-spiking amount permitted under subdivision (c)(4)(D) of this section is set no lower than one thousand two hundred fifty dollars ($1,250) per year and no higher than five thousand dollars ($5,000) per year.Amended by Act 2023, No. 104,§ 3, eff. 7/1/2023.Amended by Act 2023, No. 104,§ 2, eff. 7/1/2023.Amended by Act 2023, No. 104,§ 1, eff. 7/1/2023.Amended by Act 2021, No. 279,§ 31, eff. 7/1/2021.Amended by Act 2019, No. 427,§ 19, eff. 7/1/2019.Amended by Act 2019, No. 427,§ 18, eff. 7/1/2019.Amended by Act 2017, No. 611,§ 2, eff. 3/23/2017.Amended by Act 2017, No. 611,§ 1, eff. 3/23/2017.