Legislation would allow U.S. Mint to change coinage alloys
- Published: Jun 20, 2019, 1 PM
Legislation introduced by U.S. Sen. Joni Ernst, R-Iowa, seeks to grant the U.S. Mint authority to change the metallic composition of certain coins to save millions of dollars.
Ernst’s Currency Evolution Now To Save (CENTS) Act, S. 1794, was introduced June 12. If passed, it would give the Treasury Department, specifically the U.S. Mint, the authority to change the composition of the 5-cent coin, dime, quarter dollar, and half dollar if these changes would save taxpayer dollars and would not impact the coins’ size or function. The bill proposes that any changes must reduce the overall cost of minting a coin but not affect the diameter, weight, and functionality of the coin.
This could save more than $150 million over 10 years, according to Ernst.
“Iowa taxpayers are getting nickeled-and-dimed by the increasing costs of certain metals for producing coins,” Ernst said. “Right now, it costs hardworking taxpayers seven cents to make one nickel. Congress can fix this, and they need to. That’s why I’ve put forward this commonsense bill that will allow the Mint the flexibility to use cheaper materials to produce certain coins, without changing the size or functionality of them.”
Only the cent, 5-cent, dime and quarter dollar denominations are struck in circulation quality for release into commerce. Since 2002, the Kennedy half dollar has been struck in circulation quality for only numismatic sale at premiums above face value.
The U.S. Mint for several years has been conducting extensive research and development experimentation under provisions of the Coin Modernization, Oversight, and Continuity Act of 2010, Public Law 111-302.
Under the law’s direction, the Mint has provided biennial reports to Congress in 2012, 2014, 2016 and 2018 on the progress of that experimentation, but has made no formal recommendations for any viable options.
The impetus for the 2010 act was that the production and related distribution costs for the cent and 5-cent coin exceeded face value. The costs to produce and distribute both denominations have now exceeded face value for 13 straight years.
While the Mint’s alternative composition testing has resulted in a variety of lower cost options for the 5-cent coin, dime and quarter dollar, the Mint has found no alternative that would bring the cent’s total cost below its face value.
The U.S. Mint finances all of its operations from profits generated from sales of circulating, numismatic and bullion coins, under provisions of the Treasury, Postal Service, and General Government Appropriations Act of 1996, Public Law 104-52, which established the U.S. Mint Public Enterprise Fund, a revolving account.
While the U.S. Mint receives no congressional appropriations from taxpayer funds, the U.S. Mint still is obliged to provide Congress with budget plans for the bureau’s operations.
Under the Congressional Budget Justification and Annual Performance Report and Plan for Fiscal Year 2019, U.S. Mint officials note its budgetary requirement of $2.97 billion for fiscal year 2019 will support production of 14.5 billion coins for circulation, as well as the production of bullion and numismatic coins and associated products to meet customer demand.
The Mint report includes a legislative proposal that would grant the Treasury secretary authority to designate new compositions for the 5-cent coin, dime and quarter dollar.
One option for the three denominations would be an alloy comprising 77 percent copper, 20 percent nickel and 3 percent manganese. This option would save $4 million annually on production and distribution costs, according to the Mint, and without impacting the vending machine industry.
A different composition, clad, could be suitable for the dime and quarter dollar but not the 5-cent coin, and would comprise outer layers of an alloy of 50.75 percent copper, 14 percent nickel, 33 percent zinc and 2.1 percent manganese bonded to a core of pure copper.
Depending on production output and metals prices, cost savings with that option are projected at $16.6 million annually, but it would require vending machines to be recalibrated to accept the composition.
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