So to save my sanity, I started a new pencil system. I found these Really Useful Boxes at Office Depot. (Affiliate link for the boxes on Amazon at the end of the post.) I labeled the boxes with my students' numbers so I could reuse them each year.
On Monday, each student gets a box with 5 sharpened pencils. I also put a block eraser in there too. The student's responsibility is to keep up with all 5 pencils and the eraser, even if the pencils break. If the pencils fall in the floor, they have to pick them up so they have enough in their box. I do not provide any other pencils during the week. I feel like five is plenty. They could even break one a day and still be fine.
On Friday, I take up the boxes. If the student has all five pencils and the eraser, they get a small prize in their box for Monday. Prizes are usually either stickers, a small piece of candy, or little party favors. If less students have their five pencils on Friday, the prize gets bigger so all students will be motivated for the next week.
On Friday, I sharpen the broken pencils and their box is ready to go. Also, I do replace pencils that are beyond sharpening so each student has five pencils on Monday.
This system has entirely cut down on students not having a pencil or wanting me to constantly sharpen their pencils. If a student asks me to sharpen their pencils, I tell them that they should have 4 more in their box. I also keep my pencil sharpener hidden so the students have no idea that I have one in the classroom. (Keeps them from breaking it when I have a sub, which seems to always happen.)
If you are interested in the boxes, here's an affliliate link for them on Amazon. These boxes are really heavy plastic so they are going to last for a while.