(a) Each fiscal year the state shall contribute to the optional retirement program an amount equal to 8-1/2 percent of the aggregate annual compensation of all participants in the program during that year. A participant in the optional retirement program shall contribute to the program 6.65 percent of the person‘s annual compensation.
(b) Contributions required by this section shall be credited to the benefit of the participant.

(c) In this section, “annual compensation” has the meaning assigned to that term by Section 821.001(4).
(d) For a person who first became a participant in the optional retirement program beginning after August 31, 1996, the compensation limitation of Section 401(a)(17), Internal Revenue Code of 1986 (26 U.S.C. § 401), applies.
(e) For a person who first became a participant in the optional retirement program before September 1, 1996, the compensation limitation under Section 401(a)(17), Internal Revenue Code (26 U.S.C. § 401), does not apply. For these persons, the amount of compensation allowed to be taken into account under the plan shall be the amount allowed to be taken into account as of July 1, 1993.
(f) Subsection (e) of this section does not apply to a person whose compensation in excess of the compensation limitation of Section 401(a)(17), Internal Revenue Code (26 U.S.C. § 401), or whose state retirement contribution under this subchapter, is paid from general revenue funds or any student tuition or fee assessed under Chapters 54 or 55, Education Code.
(g) In computing the amount owed by the state under Subsection (a), the compensation of members who are employed by public junior colleges or public junior college districts shall be included in the aggregate annual compensation as follows:
(1) 50 percent of the eligible creditable compensation of employees who:
(A) otherwise are eligible for membership in the retirement system; and
(B) are instructional or administrative employees whose salaries may be fully paid from funds appropriated under the General Appropriations Act, regardless of whether such salaries are actually paid from appropriated funds; and
(2) none of the eligible creditable compensation of all other employees who:
(A) do not meet the requirements of Subdivision (1)(B) but are otherwise eligible for membership in the retirement system; or
(B) cannot be included as a qualifying employee under Subdivision (1) by application of Subsection (i).
(h) Before November 2 of each even-numbered year, the Texas Higher Education Coordinating Board, in coordination with the Legislative Budget Board, shall certify to the comptroller for review and adoption an estimate of the amount necessary to pay the state’s contributions to the retirement system for the following biennium. For qualifying employees under Subsection (g)(1), the Texas Higher Education Coordinating Board shall include only the amount payable by the state under Subsection (g)(1) in determining the amount to be certified.
(i) In determining the amount described by Subsection (h), the number of qualifying employees under Subsection (g)(1) whose compensation may be included for each public junior college or public junior college district in each biennium may not be adjusted in a proportion greater than the change in student enrollment at each college during the reporting period except that a college that experiences a decline in student enrollment may petition the Legislative Budget Board to maintain the number of eligible employees up to 98 percent of the level of the prior biennium.