(1) Funds made available to local governments shall be received, held, and expended in accordance with the provisions of KRS 95A.200 to 95A.300, any rules and regulations issued by the commission, and the following specific restrictions:
(a) Funds provided shall be used only as a supplemental distribution to firefighters, and for payments to the defined benefit pension plan to which the firefighter belongs to cover retirement costs on the supplemental distribution.
(b) Funds provided shall be distributed only to firefighters who have complied with subsections (3) and (4) of KRS 95A.230.
(c) Each firefighter shall receive distribution of the state supplement which his or her qualifications brought to the local government.
(d) Funds shall not be used to supplement existing salaries or as a substitute for normal salary increases periodically due to firefighters.
(2) This section shall not apply to funds expended pursuant to KRS 95A.240(3).