Pub. Resources Code, § 5019.12

The department shall keep a record of all expenditures chargeable against each specific portion of the fund. Any unencumbered balance in any portion of the fund, either within three months after completion of the project for which the portion was transferred or within three years from the time the portion was transferred or deposited therein, whichever is earlier, shall be withdrawn from the fund and transferred to the credit of the fund from which the appropriation was made. As to funds from other than state appropriations, they shall be paid out or refunded as provided in the agreement relating to the contributions. The Department of Finance may approve an extension of the time of withdrawal. For the purpose of this section, an estimate, prepared by the department upon receipt of bids, of the amount required for supervision, engineering, and other items, if any, necessary for the completion of a project, on which a construction contract has been awarded, shall be deemed a valid encumbrance and shall be included with any other valid encumbrances in determining the amount of an unencumbered balance.