So after 13.5 years of frustrating pencil management experiences I’ve finally come up with a plan that I have successfully maintained this year AND that is flexible enough for me to adjust according to the needs of  my students and the time constraints we are dealing with on a given day.
1. I’ve got sooooo many pencils! 
I can have up to 3 sets of (40) pencils in “active duty” at all times with at least that many in reserve in case we have a pencil emergency.
2. You pick two
I have my students either stay in their existing line from the door, or get in a line.  The line of students faces the pencil station.  The first person gets two pencils.  They walk to the end of the line and hand off their second pencil to the person at the end.  This works REALLY well for me.  It might not work in every classroom set up, but it has turned out to be my preferred method of getting pencils out.
3DRAWERS are awesome because they can’t get lost!
When I kept my pencils in a box on a shelf, the box would wander off as we needed it, and then we spent time looking for the pencil box instead of using the pencil box.  With these drawers, the “pencil box” is always ready to go! I have 3 sets of these drawers set up side by side.  Each set is labeled with a different type of supply.  As you see, I have a drawer labeled sharp # pencils and one labeled flat pencils…..These drawers don’t work the way that I imagined they would primarily because my students and I don’t have time to sort pencils as we clean up……SOOOOOO…..

2. Make the students do the work
As it turns out, sorting pencils that need to be sharpened, or are in need of erasers is a perfect act of community service for students that they can perform during class instead of doing the “fun” thing.  I like the sorting job because it can be done without the pencil sharpener so it doesn’t interfere with instruction.
3.  Pencil sharpeners are evil! 
I almost never allow myself or my students to sharpen pencils during class.  I do it when I have to, but I never like it….. The sharpener is too loud. The sharpener is too expensive.  The sharpener is too tricky.  The sharpener is too tempting……Instead, if I have a student in need of a fresh pencil, they can visit the sharp # pencil drawer.  Their pencil that needs attention goes in the flat pencil drawer and we move on.
4. It just takes 5… 
At the end of class when my students are in line waiting for their teacher, during that small breath….. of time when one class is walking out and the other is waiting to enter  I can usually snag a good helper to sharpen 5 pencils. Just 5…. that’s all….They are done before the last person in line has even crossed the threshold and it’s done.  There are small snatches of time in all of our schedules when we find ourselves with 1-2 students in need of something to do….I almost always ask them to sharpen a few pencils for me. Even though I don’t allow the pencil sharpener during class, I almost never have to sharpen pencils myself.
5. Drop it at the door! 
I have a habit of raiding the Dollar Tree regularly to acquire my pencil bags because they are my favorite type of supply holder. I like them better than boxes because they can be dropped without complaint. I don’t want to take up any more time picking up pencils than I do passing them out.  So I keep a pencil bag on a hook by the door.  When it’s time to go, my pencil helper stands by the door and as students exit, their “ticket” is my pencil.  Those “used” pencils now become the pencils that are sorted into sharp or flat drawers depending on their condition.
6.  Pencils are a privilege!
I can read crayon as easily as I can read pencil.  If I notice any misuse of the music classroom pencils then that student can write with a crayon.