California Code, Government Code - GOV § 16314

(a) The Pooled Money Investment Board shall establish the annual rate of interest charged on short-term loans of state funds executed after January 1, 1981, where the statute authorizing such loans does not prohibit interest or specify an interest rate or a method of computing an interest rate. The rate of interest shall not be less than the last available daily rate of return earned by the Pooled Money Investment Account on the actual date of withdrawal or transfer of the loan funds.

(b) The Pooled Money Investment Board shall establish the annual rate of interest charged on long-term loans of state funds executed after January 1, 1981, where the statute authorizing such loans does not prohibit interest or specify an interest rate or a method of computing an interest rate. The rate of interest shall not be less than the lesser of the last available daily rate of return earned by the Pooled Money Investment Account on the actual date of withdrawal or transfer of the loan funds, or the average of the annual rates of return earned by the Pooled Money Investment Account for the three fiscal years immediately preceding the year in which the loan is executed.

(c) As used in this section, “short-term loans of state funds” means any loan from any fund or account in the State Treasury or from the reserve for contingencies or emergencies administered by the Department of Finance to any other fund in the State Treasury or to any state or local agency for a period of less than one year.

(d) As used in this section, “long-term loans of state funds” means any loan from any fund or account in the State Treasury or from the reserve for contingencies or emergencies administered by the Department of Finance to any other fund in the State Treasury or to any state or local agency for a period of one year or longer, except loans made pursuant to Section 71.4 of the Harbors and Navigation Code and Section 21602 of the Public Utilities Code.

(e) Notwithstanding subdivision (a), the Director of Finance shall have the authority to waive interest charges on short-term loans of state funds to other state agencies or funds to cover temporary shortages of funds where anticipated reimbursements have not been forthcoming, or where the agency cannot recover interest charges in the reimbursement, or where the loan is to a department or agency which derives its support from the same fund from which the loan is to be made. This authority shall not apply to loans from the Pooled Money Investment Account.

(f) The Director of Finance may extend the loan repayment date of loans of state funds as defined in subdivisions (c) and (d). At the time any such loan repayment date is extended, the loan shall be considered to be a new loan for the purposes of establishing the annual rate of interest under the provisions of subdivisions (a) and (b) for the period the loan is extended. The interest rate established on the actual date of withdrawal or transfer of the loan funds shall not be altered by such an extension.