Sts. & Hy. Code, § 8775

If a deficiency occurs in the redemption fund with which to pay past due bonds, past due interest, or bonds or interest which will become due during the current tax collecting year, but it does not appear to the treasurer that there will be an ultimate loss to the bondholders, he shall pay matured bonds as presented and make interest payments when due as long as there are available funds in the redemption fund, in the following order of priority:

(1) All matured interest payments shall be made before the principal of any bonds is paid.

(2) Interest on bonds of earlier maturity shall be paid before interest on bonds of later maturity.

(3) Within a single maturity, interest on lower-numbered bonds shall be paid before interest on higher-numbered bonds.

(4) The principal of bonds shall be paid in the order in which the bonds are presented for payment. Any bond which is presented but not paid shall be assigned a serial number according to the order of presentment and shall be returned to the bondholder.

Bonds not paid when presented, and interest payments not paid when due, shall bear interest at the rate stated in the bonds, without compounding, until paid.