The Bureau of the Mint has discovered a novel way to trim its budget. It is going to phase out a cost-effective program and replace it with one that isn't, by buying a product that its own employes can produce more cheaply.
Donna Pope, director of the Mint, came up with the idea after discovering that last December's continuing budget resolution had cut her agency's fiscal 1982 budget by 16 percent. That meant the Mint's original $52 million appropriations request had been trimmed to $44 million.
Pope already had been busy cutting her budget. She had reduced the Mint's travel and training budgets and ordered its 150 Washington employes to take five days off--without pay--during the next few months. Even so, she was still over the $44 million limit.
But last week Pope thought of a way to cut another $3.3 million without cutting any more staff. She ordered the closing of the metal strip production line at the Philadephia Mint, which produces rolls of nickel and copper that eventually are stamped into penny and nickel coins. The 180 employes on the production line were transferred to the stamping operation.
At the time, the Philadephia Mint was producing about 29 million pounds of the metal strips a year. Another 138 million pounds of metal strips were bought from private manufacturers and distributed to the nation's four mints, officials said.
The government produced its metal strips for 49 cents per pound, according to the director of the Philadephia mint, who said private manufacturers charged at least 55 cents per pound for their strips.
Why then did Pope close down Philadephia's strip production line?
"The cost of manufacturing the strips at Philadelphia comes out of our appropriations budget," explained Pope. "The cost of buying strips from outside companies comes from the Coinage Metal Fund, which is not part of the appropriations request." The fund is a revolving account of the general treasury.
When first asked about the metal strip operation, Pope said she was not sure how much more it would cost to rely upon private companies for the strips. She also said the strip line might be restarted if Congress restores some of the Mint's funds.
If that doesn't happen, however, the government will have to rely upon private companies for the strip metal. At the 55-cent price, it would cost the Mint about $1.7 million more to buy the strip from private companies that it used to produce in Philadephia.