(a) Except as otherwise provided by paragraph (5) of subsection (e) of Code Section 47-3-60, teachers in the service of an employer operating a local retirement fund shall not be members of the Teachers Retirement System of Georgia. Such teachers shall make no contributions to this retirement system and shall be eligible for pension benefits under this retirement system only under this Code section. If such a teacher retires under his local retirement fund and if at the time of his retirement he would have been eligible for service retirement under this retirement system had he been a member, the board of trustees shall pay from this retirement system to the managing board of the local retirement fund a pension equal to the pension for membership service which would have been payable under this retirement system in respect to the part of his earnable compensation payable from state funds if such member had been classified as a member of this retirement system immediately prior to the time of his retirement, and, if he has a prior service certificate in full force and effect pursuant to subsection (b) of this Code section, the board of trustees shall also pay the pension that would have been payable on account of the prior service accumulations certified thereon, provided that the excess of any such pension payable under this retirement system over the retirement income provided by the local retirement fund from contributions of the employer shall be payable directly to the retired teacher and not to the local retirement fund; provided, however, upon service retirement of any teacher who is a member of a local retirement fund, the local retirement fund under which such teacher retired shall receive a service retirement pension on account of his service thereunder, in accordance with the provisions of this Code section, which shall consist of:

(1) A pension equal to the annuity which would have been allowable at age of retirement if such teacher had been a member of this retirement system and had made contributions of 5 percent of his earnable compensation payable from state funds, but not to exceed an annuity allowable at age 65, computed on the basis of such contributions as would have been made prior to age 65; and

(2) If he has a prior service certificate in full force and effect, an additional pension equal to the annuity which would have been provided at age of retirement, but not to exceed an annuity which would have been provided at age 65 by three times the amount of his prior service accumulations as heretofore defined, with regular interest thereon from time to time in effect from the date of establishment until the date of his retirement, but not beyond age 65.

It shall be the duty of the employers operating local retirement funds to report to the board of trustees annually or at such other intervals as shall be set by the board of trustees the earnable compensation paid from state funds of each teacher in their employ who is paid from state funds and such other information as may be needed for establishing the prospective benefit of the member.

(b) Each employer that operates under a local retirement fund shall report to the Board of Trustees of the Teachers Retirement System of Georgia a complete list of all teachers in his employ, giving for each such teacher the date of birth, years of service, and salary, showing the amount of such salary which is paid from state funds, and such other information as is needed by the board of trustees in order to establish for each teacher the prior service credits to which he is entitled on account of payment of his salary from state funds. The board of trustees shall then issue to such teacher a prior service certificate which shall continue in force so long as such teacher remains in the employ of such employer or in the service of an employer that does not operate under a local retirement fund, without a break in service of the kind which would have resulted in the canceling of such certificate had the teacher been a member of this retirement system.

(c) If a member of this retirement system enters the employ of an employer operating a local retirement fund, he shall cease to contribute to this retirement system and shall become subject to the provisions of the local retirement fund, unless he has elected to continue his membership in this retirement system under paragraph (5) of subsection (e) of Code Section 47-3-60. He shall not lose his previously accrued credits in the retirement system so long as he continues in the service of such employer, and he shall accrue additional credits on such part of his salary as is paid from state funds.

(d) If a teacher in the service of an employer operating a local retirement fund becomes a member of this retirement system by entrance into the service of an employer which does not operate under a local retirement fund, he shall contribute to this retirement system while so employed and shall retain the credits in the retirement system which he had at the time of becoming a member.

(e) Notwithstanding any other provisions of this chapter, the actuary in determining the normal and accrued liability contributions and the board of trustees in setting such contributions and the amount of the appropriations to be paid by the state to the pension accumulation fund shall include the liabilities on account of the state compensation paid to teachers in the employ of employers having local retirement funds; and the pensions payable from the pension accumulation fund shall include those payable on account of teachers in the service of employers operating local retirement funds.

(f) If a majority of teachers in the service of an employer operating a local retirement fund vote to discontinue the local retirement fund and the employer approves such discontinuance, the local retirement fund shall be dissolved and its operation discontinued as of a date to be set by the employer. Teachers in the employ of such employer shall thereupon become eligible for membership in this retirement system. Within one year after the dissolution of the local retirement fund, its managing board shall pay to each teacher covered by the local retirement fund the amount, if any, which would have been payable under the local retirement fund as a withdrawal benefit had his employment terminated on the date of dissolution. If the assets of the local fund are not sufficient to make such payments in full to or with respect to all teachers, the payments made shall be reduced in the ratio that the amount of such assets bears to the total of such payments if made in full. If a balance remains after making such payments in full to or in respect to all teachers, such balance shall be paid to the employer by the managing board of the local retirement fund. Upon the dissolution of any local retirement fund, in accordance with this subsection, the employer shall become liable for and shall pay all pensions entered upon and in effect at the time the local retirement fund is dissolved.

(g) If any local retirement fund is dissolved pursuant to subsection (f) of this Code section within six months after the commencement date, teachers in the service of such employer shall be entitled to become members of this retirement system as of the date of such dissolution, shall be entitled to prior service credits pursuant to Code Section 47-3-86 for service before July 1, 1943, and shall be entitled to creditable service after the date of such dissolution.

(h) Anything in this Code section to the contrary notwithstanding, an employer operating a local retirement fund may elect to have benefits payable under this retirement system in respect to earnable compensation in excess of the part of earnable compensation payable from the state funds, subject to the approval of the board of trustees. If the board of trustees approves, an actuarial valuation shall be made by the actuary of this retirement system in order to determine the amount of the additional contribution payable by the employer to provide such additional benefits. Upon agreement of the employer to provide such additional contributions by uniform payments over a period of not more than 20 years, such additional credits shall be allowed to the members in the employ of such employer as will result in the payment of such additional benefits at retirement.