(a) For a state employee employed by an institution of higher education, the benefit replacement pay is an increase in compensation equal to the sum of:
(1) 5.85 percent of the employee's compensation as of October 31, 1995, subject to the limit provided by Subsection (b); and
(2) an additional amount equal to the retirement contribution paid by the employee because of the benefit replacement pay provided by this subsection.
(b) The amount paid to an eligible state employee of an institution of higher education under Subsection (a)(1) may not exceed $965.25.
(c) In this section, "compensation" means annualized base salary or wages, including longevity and hazardous duty pay.