California Code of Regulations
Title 9 - Rehabilitative and Developmental Services
Division 3 - Department of Rehabilitation
Chapter 6 - Business Enterprises Program for the Blind
Article 7.9 - Vending Facility Trust Fund and Standards for Vending Machine Commissions
Section 7221 - Vending Facility Trust Fund and Set-Aside Fees

Universal Citation: 9 CA Code of Regs 7221

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) Vendors operating a Business Enterprises Program for the Blind, hereafter BEP, vending facility shall pay a set-aside fee into the Vending Facility Trust Fund.

(1) Payment of the set-aside fee shall be made monthly based on the net proceeds, as defined in Welfare and Institutions Code section 19629(d) of the vending facility for the preceding month. The fees shall not exceed 6 percent of the monthly gross sales, and the vendor may determine if he or she shall pay 6 percent of the monthly gross sales or use the BEP established set-aside fee schedule that has been approved by the Rehabilitation Services Administration to determine the set-aside fees to be paid. When using the set-aside schedule, the fees shall not exceed 6 percent of the monthly gross sales.

(2) Payment of the set-aside fee shall be made to the Department of Rehabilitation, Vending Facility Trust Fund, Accounting Section, P.O. Box 944222, Sacramento, California, 94244-2220. Payment of the fee shall be accompanied by the completed DR 478, Vendor's Monthly Operating Report (Rev. 06/16), incorporated by reference herein. The income and expenses of each vending facility shall be reported using a DR 478, Vendor's Monthly Operating Report (Rev. 06/16).

(b) No set-aside fee shall be paid by a vendor when the net proceeds of the Business Enterprise are less than the set-aside fee exemption amount determined by BEP in accordance with Welfare and Institutions Code section 19629(b) and pursuant to (a)(1) herein, however, the vendor is required to file a completed DR 478, Vendor's Monthly Operating Report (Rev. 06/16) with the Department of Rehabilitation, Accounting Section, in accordance with subdivision (a)(2) of this subdivision, by the 25th day of the month following the month being reported or the vendor will be subject to the penalties contained in (c) herein.

(1) BEP shall adjust the set-aside fee exemption amount annually to reflect changes in the cost of living by the method indicated in Welfare and Institutions Code section 19629(b).

(2) BEP shall provide 30 days advance written notice to vendors of any adjustment to the set-aside fee exemption amount.

(3) Adjusted set-aside fee exemption amounts shall be effective on January 1st of the calendar year following the notice of adjustment.

(c) The DR 478, Vendor's Monthly Operating Report (Rev. 06/16), and the sum of the set-aside fee, payment for liability insurance and workers' compensation insurance, hereafter collectively referred to as the set-aside charge, must either be received by or postmarked by the 25th calendar day following the reporting period month-end in accordance with subdivision (a)(2) of this section. Period month-end shall mean the last calendar day of the month. When the 25th day of the month falls on a Saturday, Sunday or a holiday, the DR 478, Vendor's Monthly Operating Report (Rev. 06/16) and the set-aside charge shall be considered timely if postmarked on the following business day pursuant to Government Code section 6706. Penalties are not deductible expenses for purposes of calculating the set-aside fee.

(1) A penalty not to exceed either 10 percent of the late set-aside charge or $50, whichever is greater, shall be assessed if the DR 478, Vendor's Monthly Operating Report (Rev. 06/16) or set-aside charge is late, but will not exceed $250 for the first month. A $50 penalty will be assessed for each subsequent month the late set-aside charge remains unpaid. If the set-aside charge or penalty remains unpaid for 90 days or more, the Vendor's Operating Agreement or License may be suspended or terminated. The DR 478, Vendor's Monthly Operating Report (Rev. 06/16) or set-aside charge is late when one or more of the following conditions occur:

(A) Set-aside charge or the DR 478, Vendor's Monthly Operating Report (Rev. 06/16), are not received pursuant to subsection (c) herein.

(B) The set-aside charge shall be considered late if the payment amount is less than the amount due. Penalties will be assessed pursuant to section 7221(c)(1) above with the exception of outstanding amounts due of $100 or less. If the outstanding amount due is $100 or less, a 10% penalty will be assessed to the amount due and the vendor will be notified of the delinquent amount. The vendor is required to add the delinquent amount to the next month's DR 478, Vendor's Monthly Operating Report (Rev. 06/16) after notification. If the outstanding amount is not included in the next month's set-aside charge after notification, a $50 penalty will be assessed pursuant to section 7221(c)(1).

(C) The set-aside charge shall be considered past due if payment is made by check, and the check is returned for insufficient funds or other reasons.

(2) Penalties shall not be assessed, if acts of nature beyond the vendor's control and due to no negligence on the part of the vendor, the vendor is unable to file the DR 478, Vendor's Monthly Operating Report (Rev. 06/16), in accordance with subdivision (c) of this section. The vendor must notify the BEP Manager in writing of the facts that prevent the vendor from filing the DR 478, Vendor's Monthly Operating Report (Rev. 06/16) in accordance with subdivision (c) of this section. The BEP Manager shall determine whether penalties shall not be assessed in accordance with this subsection.

(3) Vendors who have submitted a DR 478, Vendor's Monthly Operating Report (Rev. 06/16) but have failed to include the set-aside charge shall be given written notice of the delinquency.

(4) If a DR 478, Vendor's Monthly Operating Report (Rev. 06/16) is delinquent for more than one month, the BEP or the Department shall determine the set-aside charge based on the most reliable information available and the vendor shall be liable for this amount with applicable penalties.

(5) Submission of the DR 478, Vendor's Monthly Operating Report (Rev. 06/16), is an attestation that all amounts are true and correct.

(A) In the event a vendor is delinquent the first month at a new or newly assigned vending facility, the BEP or the Department may determine the set-aside fee using the estimates contained in the DR 460, Vending Facility Announcement (Rev. 09/09), incorporated by reference herein.

(d) Vendors shall send a copy of the DR 478, Vendor's Monthly Operating Report (Rev. 06/16), to the Department's Accounting Office, as provided in subdivision (a)(2) of this section, as well as the BEP district office where the primary vending facility is located. Upon receipt, the Business Enterprises Consultant (BEC) shall either accept or reject the DR 478 Vendor's Monthly Operating Report (Rev. 06/16). The BEC's review to determine whether to accept or reject the DR 478 Vendor's Monthly Operating Report (Rev. 06/16) shall include, but is not limited to, the following:

(1) Verification of compliance with the DR 478A, Vendor's Monthly Operating Report Privacy Notice and Instructions (Rev. 06/16), incorporated by reference herein.

(2) Review of the gross receipts, net sales, cost of goods, payroll expense, other operating expense, other income, net proceeds, set-aside fee, and payments due. This review shall include all required data, increases or decreases, during the past year.

(e) If after the review, the BEC identifies issues that substantiate rejection of the DR 478 Vendor's Monthly Operating Report (Rev. 06/16), the BEC will attempt to contact and discuss these issues with the vendor. If the issues are not rectified during this communication, the DR 478, Vendor's Monthly Operating Report (Rev. 06/16) shall be returned to the vendor with a written notice of the deficiencies. The vendor shall correct all deficiencies and submit the corrected DR 478, Vendor's Monthly Operating Report (Rev. 06/16) to the Department's Accounting Office in accordance with subdivision (a) of this section and the BEP field office in accordance with subdivision (d) of this section. The late penalty shall be assessed in accordance with subdivision (c) of this section.

(f) A vendor operating an interim vending facility shall submit a separate DR 478, Vendor's Monthly Operating Report (Rev. 06/16), while he or she is operating the facility.

(g) Department records of financial data including quarterly and annual reports of the Vending Facility Trust Fund shall be made available to any interested party in accordance with the California Public Records Act (Government Code section 6250 et seq.).

(h) Set-aside funds deposited into the Vending Facility Trust Fund shall be used only for the purposes specified in Welfare and Institutions Code section 19629, 20 United States Code section 107b(3), and 34 Code of Federal Regulations section 395.9.

(i) The Department shall report financial averages to vendors. Financial averages are used by the Department to review trends and patterns within the food service industry, and to provide Department field staff with data that can be used to assist vendors to improve the operation and profitability of their vending facilities. BEP shall prepare and distribute to all vendors an annual report of the BEP profit and loss statewide financial averages for each type of by August 31st of each year, reporting data for the previous fiscal year.

1. Amendment filed 2-10-83; designated effective 2-20-83 pursuant to Government Code section 11346.2(d) (Register 83, No. 7).
2. Renumbering of former section 7219 to section 7221 and amendment of NOTE and renumbering of former section 7221 to section 7224 filed 2-4-93; operative 3-8-93 (Register 93, No. 6).
3. Amendment of subsection (a) and new subsections (b)-(b)(2) filed 1-12-94 as an emergency; operative 1-12-94 (Register 94, No. 2). A Certificate of Compliance must be transmitted to OAL by 5-12-94 or emergency language will be repealed by operation of law on the following day.
4. Reinstatement of section as it existed prior to emergency amendment filed 3-3-95 by operation of Government Code section 11346.1(f) (Register 95, No. 9).
5. Amendment of subsections (a) and (b), new subsection (b)(1) and amendment of NOTE filed 10-29-99 as an emergency; operative 10-29-99 (Register 99, No. 44). A Certificate of Compliance must be transmitted to OAL by 2-28-2000 or emergency language will be repealed by operation of law on the following day.
6. Editorial correction of subsection (d) and NOTE (Register 2000, No. 13).
7. Certificate of Compliance as to 10-29-99 order, including further amendment of subsection (b) and (b)(1), transmitted to OAL 2-28-2000 and filed 4-4-2000 (Register 2000, No. 14).
8. New article 7.9 heading, amendment of section heading, repealer and new section and amendment of NOTE filed 9-22-2009; operative upon the approval of the Secretary of the United States Department of Education, in accordance with title 34, Code of Federal Regulations, section 395.4(a) (Register 2009, No. 39).
9. Approved by the Secretary of the United States Department of Education in accordance with section 395.4(a) of title 34 of the Code of Federal Regulations on 6-2-2010; operative 9-15-2010 pursuant to section 7210(b)(2) of title 9 of the California Code of Regulations (Register 2010, No. 39).
10. Amendment of subsections (a)(2), (b) and (c)-(c)(1)(C), repealer of subsection (c)(1)(D), amendment of subsections (c)(2)-(4), new subsection (c)(5), amendment of subsection (d), repealer of subsection (d)(1), subsection renumbering and amendment of newly designated subsections (d)(1)-(2) and subsections (e)-(f) filed 10-18-2017; operative upon approval of the Secretary of the United States Department of Education in accordance with title 34 of the Code of Federal Regulations section 395.4(a) (Register 2017, No. 42).

Note: Authority cited: 20 USC Section 107b(5); 34 CFR Section 395.4, and Sections 19006, 19016 and 19639, Welfare and Institutions Code. Reference: 20 USC Sections 107b(3) and 107b-1(1); 34 CFR Sections 361.49(a)(5)(v), 395.9 and 395.12; Government Code Sections 6250 et seq., 6706 and 12926; and Sections 19629, 19637 and 19639, Welfare and Institutions Code.

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