(1) When a city belonging to the municipal police officers' retirement system has not negotiated a salary agreement with their actively employed police officers by July 1, the following actions will be taken by the public employees' retirement division:

(a) Supplemental benefits and allowance adjustments will be paid to retirees from that city which will be calculated using the base salary of a newly confirmed police officer of that city during the most recently reported fiscal year for which there was a negotiated salary agreement in effect.

(b) By August 1 a report will be sent to the state auditor stating the supplemental benefits payable from the appropriate insurance premium tax funds based upon information available from cities as of that date.

(c) As salary agreements are negotiated by cities and the retirement division is notified of changes in base pay for newly confirmed police officers, supplemental benefits will be recalculated and adjustments paid retroactively to retired members from those cities.

(d) Updated reports will be sent to the state auditor certifying the additional supplemental benefits payable from insurance premium tax funds during a given fiscal year as those additional amounts become known.