Cal. Government Code § 16780

(a) The committee may provide for the issuance and sale or exchange of refunding bonds for the purpose of redeeming, retiring, or purchasing for retirement, outstanding bonds at or before their maturity, if the committee determines that refunding is necessary or advisable in order to do either of the following: (1) To effect a favorable reorganization of the debt structure of the state. (2) To effect a saving in debt service cost to the state, as measured by the present value of that saving. (b) When determining debt service savings for purposes of paragraph (2) of subdivision (a), the committee shall include, as interest on a refunded bond, the interest, if any, that will result from a related hedging contract, as described in subparagraph (A) of paragraph (2) of subdivision (d) of Section 16731. The committee may, when determining debt service savings, for purposes of paragraph (2) of subdivision (a), base the interest of a refunding bond upon the effective fixed interest rate under a hedging contract described in clause (ii) of subparagraph (B) of paragraph (1) of subdivision (d) of Section 16731.