(a) Except as provided by Subsection (b), the payment to a state employee under this subchapter shall be computed by multiplying the employee’s rate of compensation on the date of separation from state employment by the total number of hours of vacation time determined under § 661.064.
(b) The payment under this subchapter to a state employee who separates from state employment while holding a position that does not accrue vacation time shall be computed according to this subsection. The employee’s final rate of compensation in the last position held that accrues vacation time shall be multiplied by the employee’s total number of hours of vacation time determined under § 661.064.

(c) Under this section, rate of compensation:
(1) includes an emolument in lieu of base pay for which the state employee was eligible; and
(2) does not include longevity or hazardous duty pay.