In response to the federal government’s decision to stop producing the penny, the Tennessee Comptroller of the Treasury has issued guidance to help local governments, including utility systems, adjust their payment processing practices in a fair, transparent, and legally sound manner.

The guidance outlines several options local governments may consider when accepting cash payments, including encouraging exact change, offering electronic payment alternatives, crediting customer accounts for non-exact cash payments, and adjusting rates or fees to increments of five or ten cents when permitted by law.

The Comptroller’s Office also urges local officials to carefully evaluate any changes before implementation. Key considerations include consulting legal counsel, applying policies uniformly, avoiding preferential treatment among payment types, training staff, and clearly communicating changes to the public.

“This guidance is intended to help local governments navigate a practical challenge while maintaining fairness, transparency, and compliance with the law,” said Comptroller Jason Mumpower. “Each community is different, and local leaders should adopt policies that make sense for their residents while staying within their legal authority.”

The guidance applies to counties, municipalities, and other local government entities across Tennessee, including utilities and authorities.

In light of the federal discontinuance of the penny, this guidance aims to assist local governments, including utilities and authorities, in adopting processing procedures that are authorized under federal and state law while maintaining fair and transparent operations. Payment Procedures Local governments should consider implementing procedures for all customer transactions in response to the discontinuation of the penny.

The following are options that local governments may wish to consider: • Requiring or encouraging customers to provide exact change when making cash payments; • Offering alternative payment methods including debit cards, credit cards, electronic checks, or online payment portals; • Establishing protocols for crediting a customer’s account when a customer is paying non-exact cash for recurring payments; • Declining to accept non-exact cash payments, when authorized; and • Adjusting rates, fees, and charges within the local government’s legal authority to multiples of $0.05 or $0.10. Implementation Considerations Prior to implementing any new or amended policies or procedures related to the discontinuance of the penny, local governments should remember these important considerations: • Consult with your attorney to ensure you are acting within your legal authority; • Ensure that any new policies and procedures are reasonable as applied to your local community; • Refrain from adopting policies and procedures that provide a benefit to one type of payment over another; • Apply new policies and procedures uniformly; • Clearly communicate any new policies and procedures to the local community through appropriate channels; • Train all staff as necessary; and • Ensure all policies and procedures comply with government accounting standards and that accounting systems can appropriately address the new policies and procedures.