Cal. Sts. & High. Code § 8514

Notwithstanding any other provision of this division, income realized from the investment of money on deposit in a fund or account established pursuant to this division may be used, at the option of the legislative body, to pay all or any portion of any amount required to be rebated to the United States in order that interest on obligations issued pursuant to this division be excluded from gross income for purposes of federal income taxation.