By Sarah Mahan

The Selma Times-Journal

A penny saved may be a penny earned, but at this point do people even care?

According to Maj. Steve Welch of the local Salvation Army branch, the donations raised by those ringing bells each year often depend on coins dropped into the red and green kettles.

If the penny were no longer considered legal tender in the United States, Welch said the Salvation Army would probably see a decrease in donations.

“Christmas is an important season for us as far as change donations go because of our kettles. Last Christmas we collect 38,381 pennies,” Welch said. “If you take away the pennies we collected last year, we would receive almost $400 less.”

Welch expressed uncertainty over whether discontinuing pennies would actually hurt donation revenue.  “I suppose we could receive more nickels,” he said.

While two legislative bills have been proposed over the past decade to make the penny obsolete, few have definite answers about the impact discontinuing the penny would have on the United States economy and the nation’s citizens.

While some warn of the negative effects of phasing out America’s first coin, others say that rising costs have caused the nation’s smallest coin denomination to outlive its usefulness.

The United States Mint agrees that — at the very least — the cost of producing the penny have increased over time.

“For fiscal year 2012, it cost two cents to make a penny. The costs have increased steadily over recent years as prices for metals have increased,” Michael White, spokesperson for the mint, said.

“The cost of metal ‘to the Mint’ includes the cost of our fabricator to transform the zinc and copper raw materials into the ready-to-strike blanks (which must meet our quality specifications). That cost was just under 1 cent per-unit during FY 2012.”

It is not just raw material costs that have caused increases in production prices; the administrative costs of producing the penny have increased to slightly under half a cent per penny or approximately $20 million dollars per year as well.

The number of pennies created and the costs of the metals used to produce them coupled with shipping and handling costs created a $109 million deficit in 2012, according to the United States Mint’s 2012 report.

The penny’s proponents note that the costs of the one-cent piece do not necessarily outweigh the rewards by reminding that many enjoy collecting the coin.

Hart Sims, Selma resident and avid coin collector, said he began collecting coins at the age of nine, and as his collection grew, he acquired a rare penny from the first addition of one-cent pieces minted in the United Sates.

“My great grandmother collected coins, and it went on from there. She didn’t give me much of any real value, but it got me started. Some Christmases, I would ask to be able to order a coin for my present,” Sims said. “The Fugio is [one of] the most interesting and most valuable coins in my collection. They are rare because they are actually made out of 100 percent copper.”

Sims most interesting coin is a penny that’s rare due to the 1787 composition, and it is the penny’s current composition that often causes the most debate.

Today’s penny contains only 2.5 percent copper — used in the penny’s outer coating — as an effort to reduce costs. White said efforts are again being made to change to composition of the coin as a cost-cutting measure.

“One of the things we did [to reduce the deficit penny’s cause] as part of some legislation a few years ago is a research and development study to look at alternative metals,” White said.

The study, part of the Mint’s 2012 biannual report to Congress, focused research on available alloys and plated-metals that use aluminum, steel, zinc, copper and nickel that could be used to reduce coin production costs.

The study states changes made to the composition of the one-cent coin would “not yield significant cost improvements” because zinc-the metal that composes the remaining 97.5 percent of the penny- is more expensive than any available alternative options.

The efforts to change the coin’s composition come after two failed legislate bills — one in 2001 and one in 2006 — attempted to stop the use of pennies in cash transactions by causing merchants to round totals ending in 1, 2, 6 and 7 down to the nearest nickel and rounding up transactions that end in any other number.

Those that hope to discontinue the penny believe rounding would eliminate both the penny’s uselessness and make trash transactions manageable.

American military bases have experienced few problems since eliminating pennies in on-base transactions during the 1980s, due to pennies being “not cost effective to produce,” according the United States Air Force.

Even local banks have had to require customers to wrap their change to make it manageable.

“It is labor intensive [to wrap the coins], and we just don’t have the luxury of having enough tellers to be able to [do it],” Catesby Jones, president of Selma-based First Cahawba Bank, said. “Pennies are no more difficult to deal with any other coin, though. Customers deal with pennies in their business transactions, and we will deal with them as long as they do. As long as they are wrapped, they don’t cause any problems,” he said.

The penny being produced at a deficit for the sixth consecutive year is creating a problem. White said the Mint has no control over changing the penny’s composition or production rates, as Congress controls those factors.

“We do everything based on congressional authorization, so we are basically a factory. We fulfill orders from the federal government,” he said.

This leaves coin collectors like Sims not totally sure if discontinuing the penny will affect his coin collection.

“Even if the penny were to be eliminated, it probably wouldn’t effect my coins much because value is effected by the number of coins that are in existence,” Sims said.

White said that the only thing that is for certain is that coin production has been on the rise.

“Coin demand is up. The primary driver for coin production is economic demand and we fulfill orders from the Federal Reserve and they have been ordering more as the economy does a little bit better,” White said. “About 60 percent of our coin shipments are pennies.”

While penny production and costs increase, the future of the penny will continue to remain in the hands of Congress — and coin collectors.