(a) The state board by rule may authorize the governing body of a participating department to:
(1) make one or more supplemental payments to its retirees and beneficiaries of the pension system; or
(2) provide an increase in the amount of annuities paid to retirees and beneficiaries of the pension system.
(b) The governing body of a participating department that elects an option under a rule adopted under this section shall fund all increased benefits that are provided to its retirees and beneficiaries of the pension system under the option.