California Code, Government Code - GOV § 19997.10

(a) Any officer or employee, directly or indirectly, entitled to or having permanent status under the provisions of Article VII of the Constitution or the State Civil Service Act, who is displaced by one having a right to return shall be accorded the same rights to elect demotion in lieu of layoff as though he or she had had permanent status at all times in any previous position.

(b) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.