Amtrak’s Route Accounting: Fatally Flawed, Misleading & Wrong
August 23, 2018
The Rail Passengers Association (RPA) strongly believes that the ongoing debate concerning the future shape of Amtrak's national network has been distorted by its use of fully allocated costs rather than avoidable costs as required by statute. The adverse outcome of using fully allocated costs is the widespread and incorrect perception that Amtrak’s Northeast Corridor is financially self-sufficient and that Amtrak’s need for taxpayer funding results entirely from its operation of passenger trains in the rest of the nation – the National Network, which consists of state supported regional and federally supported long distance routes.
In our companion White Paper, Rail Passengers Association explains why fully allocated costing combined with Amtrak’s catastrophically flawed route accounting system grossly misrepresents – and exaggerates – the public cost of providing passenger trains as a mobility choice for the entire nation. Faulty route accounting has, in turn, led to the popular misconception that the abandonment of long-distance trains will eliminate Amtrak’s need for taxpayer funding. Nothing could be further from the truth. The funding needed for the Northeast Corridor dwarfs that of what’s needed for the rest of the nation. Rail Passengers Association’s white paper explains the history of Amtrak’s route accounting methodology and demonstrates that if Amtrak applied the more economically sound avoidable costing methodology to assess the performance of its various routes, Amtrak’s leadership team would not be working to replace the current national network with disconnected groups of short distance regional trains serving only a small number of major metropolitan areas.
The Rail Passengers Association asks Congress to require Amtrak immediately to halt all route, schedule and frequency reductions as well as recent on-board service modifications; then require Amtrak’s leadership team to explain to, and gain the approval of, the Congress, the states and stakeholders of its vision of the passenger train system and service they envision for the future. Cover, concealment and stealth tactics are appropriate for a military operation but not for a Government Sponsored Enterprise whose purpose is to provide passenger train service to the nation.
For more than 13 years, Congress and other federal agencies have called for more accurate, precise and transparent reporting of Amtrak’s component routes. Numerous arms of government including the Federal Railroad Administration, the USDOT Office of Inspector General (OIG) and the General Accounting Office have all found Amtrak’s route accounting system deficient and not compliant with federal statute requiring disclosure of avoidable costs. The end result has been a false framing of Northeast Corridor services as "profitable" and the rest of the system as "unprofitable." Neither can exist without federal taxpayer support.
Congress should demand that Amtrak comply with the already in place laws, regulations and Congressional mandates and make public the financial performance of each individual route employing the avoidable cost methodology. In the interim, Congress should require Amtrak to refrain from any further route and on-board service until it reveals its plans for the future system and the economic analysis underlying it to public scrutiny, analysis and agreement. Congress must assert oversight of Amtrak -- a Government Sponsored Enterprise – and not allow Amtrak to operate by stealth and deception. “Sunlight is the best disinfectant.”
"The National Association of Railroad Passengers has done yeoman work over the years and in fact if it weren’t for NARP, I'd be surprised if Amtrak were still in possession of as a large a network as they have. So they've done good work, they're very good on the factual case."
Robert Gallamore, Director of Transportation Center at Northwestern University and former Federal Railroad Administration official, Director of Transportation Center at Northwestern University
November 17, 2005, on The Leonard Lopate Show (with guest host Chris Bannon), WNYC New York.