Amtrak: Better Reporting, Planning, and Improved Financial Information Could Enhance Decision Making
Highlights
What GAO Found
Amtrak's 2012 reorganization into Northeast Corridor, state-supported, and long-distance business lines established a structure to improve accountability for performance, but Amtrak could do more to accurately demonstrate its results. Most notably, Amtrak's new strategic management system as implemented by its long-distance line of business reflects several leading performance-management practices, such as linking line-of-business goals and initiatives to corporate-wide strategic goals, assigning personnel to execute initiatives, and tracking the results. However, Amtrak has not prioritized the implementation of this system across all of its remaining lines of business and departments. Furthermore, Amtrak's inconsistent and incomplete reporting of its financial data hinders Amtrak's ability to demonstrate the performance of its lines of business.
Amtrak and its stakeholders have developed a plan to address critical Northeast Corridor infrastructure needs, but its implementation faces significant challenges. Many of the corridor's bridges and tunnels are aging and in need of replacement to bring them to a state of good repair. The Northeast Corridor Infrastructure and Operations Advisory Commission (Commission)—which includes the Department of Transportation, Amtrak, states, and others—has developed a 5-year capital plan costing $17.7 billion from fiscal years 2016 through 2020 to begin addressing the backlog of deferred investments and make other improvements. But implementing this plan presents challenges because it lacks funding for 60 percent of its costs and would require Amtrak, states, commuter railroads, or the federal government to provide additional funding of about $2.1 billion per year through 2020. The Commission also lacks criteria for prioritizing projects; as a result, Congress and states lack information to inform their decisions about whether to provide additional funding to implement the Commission's plans.
Although requirements in the Passenger Rail Investment and Improvement Act (PRIIA) of 2008 have resulted in a methodology that increased states' share of costs on state-supported routes and reduced federal subsidies, these routes still require federal funds to support their operation. More specifically, states' increased share of operating and capital equipment costs reduced Amtrak's reliance on federal funds by about $100 million for these routes in fiscal year 2014 compared to 2013. Amtrak still required almost $86 million in federal grants in fiscal year 2014 to cover operating losses from these routes, and Amtrak reported that it will continue to require federal funding for these routes. However, Amtrak has not developed clear information detailing the specific costs and activities that this federal assistance is intended to cover. In the absence of such detailed information, Amtrak lacks critical information to help it assess its costs and is not well positioned to develop strategies to reduce the cost of its services. Similarly, many states have questioned the accuracy or transparency of Amtrak's cost information, and Amtrak has experienced challenges in finalizing fiscal year 2015 operating agreements with several states. In response, Amtrak, states, and the Federal Railroad Administration (FRA) have established a formal process for the parties to discuss states' concerns and make improvements to the cost allocation process moving forward. Some states have also sought opportunities to reduce costs by seeking alternative passenger rail providers, but the results of these efforts have yet to be realized.
Why GAO Did This Study
Amtrak provides a range of passenger services on its Northeast Corridor, state-supported, and long-distance routes, but has not consistently reported revenues and expenses for these services. In 2008, PRIIA directed Amtrak to address this and other issues. In response, Amtrak reorganized into three business lines for its services to make its finances more transparent and management more accountable. GAO was asked to review Amtrak's efforts to reorganize and implement certain PRIIA reforms.
This report evaluates: (1) the status of Amtrak's reorganization; (2) Amtrak and stakeholder efforts to address Northeast Corridor infrastructure needs; and (3) the impact of PRIIA requirements on state-supported routes. GAO reviewed Amtrak financial data (fiscal years 2010 through 2014), planning documents, and interviewed Amtrak officials and key stakeholders from the FRA, 18 states that support Amtrak routes, and 7 commuter or intercity passenger railroads selected for their scope of operations.
Recommendations
GAO recommends that Amtrak (1) prioritize the adoption of its strategic management system company-wide, (2) improve its financial reporting, and (3) detail costs of state-supported routes paid by federal grants and (4) that the Commission develop criteria to prioritize planned investments. Amtrak agreed with the first recommendation and provided context about the other recommendations. GAO continues to believe its recommendations are valid as discussed further in this report. The Commission concurred with GAO's recommendation for it.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| National Railroad Passenger Corporation | To ensure that planned improvements to Amtrak's routes are implemented and their outcomes can be evaluated, the President of Amtrak should prioritize the adoption of Amtrak's strategic management system in all of Amtrak's remaining lines of business and functional departments. |
Amtrak provides a range of passenger rail services in the United States, including frequent service along the Northeast Corridor, shorter-distance intercity services within 18 states that financially support their routes, and long-distance services that connect rural areas and major cities. In 2012, Amtrak reorganized into lines of business centered on these three different intercity passenger rail operations-Northeast Corridor, state-supported, and long-distance services-and a fourth business line focused on the planning and development of the Northeast Corridor's infrastructure. In 2016, GAO reported that while Amtrak's 2012 reorganization was designed to improve accountability for performance, Amtrak could do more to accurately demonstrate the results of its lines of business. Most notably, Amtrak's new strategic management system-which was designed to help its business lines and functional departments plan for and implement improvements to realize both financial and operational benefits-reflected several leading performance-management practices, such as linking business line goals and initiatives to corporate-wide strategic goals, assigning personnel to execute initiatives, and tracking the results. As of September 2015, Amtrak had only implemented this system in its long-distance business line focusing on initiatives that increase revenue, reduce costs, and increase customer satisfaction. However, Amtrak had not prioritized the system's implementation across Amtrak's remaining lines of business and departments. GAO reported that in the absence of corporate-wide adoption of the system it is difficult to hold Amtrak accountable for the results of its initiatives to improve Amtrak's financial or operational performance. Therefore, GAO recommended that Amtrak prioritize the adoption of this system for all of its lines of business and functional departments. In 2019, GAO confirmed that while Amtrak had discontinued its strategic management system, it had adopted a similarly-designed system across all of its lines of business (which now include their functional departments). Specifically, similar to the strategic management system, Amtrak's new system aligns business-line goals and initiatives to a corporate-wide strategy through a new corporate-wide blueprint that established a vision for the company and a set of corporate-wide strategic goals or pillars that are designed to implement Amtrak's vision. Amtrak also established corresponding initiatives in each business line and assigned personnel to implement each goal, such as to achieve a certain level of customer satisfaction or put Amtrak's safety program in place. Amtrak also measures and reports progress in completing these initiatives monthly to Amtrak's Board of Directors. In addition, all of Amtrak's current lines of business outline their progress each fiscal year and their plans to meet these goals over the next five fiscal years in an externally available report on Amtrak's website. By adopting this new system across all of lines of business, Amtrak now has a corporate-wide process to implement initiatives toward the company's strategic goals and improve accountability for Amtrak's financial and operational performance.
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| National Railroad Passenger Corporation | To ensure that planned improvements to Amtrak's routes are implemented and their outcomes can be evaluated, the President of Amtrak should externally report how Amtrak's initiatives meet the goals established under the Amtrak's strategic management system. |
Amtrak provides a range of passenger rail services in the United States, including frequent service along the Northeast Corridor, shorter-distance intercity services within the 18 states that financially support their routes, and long-distance services that connect rural areas and major cities. In 2012, Amtrak reorganized into lines of business centered on these three different intercity passenger rail operations-Northeast Corridor, state-supported, and long-distance services-and a fourth business line focused on the planning and development of the Northeast Corridor's infrastructure. In 2016, GAO reported that Amtrak's new strategic management system reflected several leading performance-management practices, such as linking line-of-business goals and initiatives to corporate-wide strategic goals and assigning personnel to execute initiatives. As of September 2015, Amtrak had only implemented this system in its long-distance business line focusing on initiatives that increase revenue, reduce costs and increase customer satisfaction. However, Amtrak had neither reported nor planned to report on the progress or results of its strategic management system initiatives outside of Amtrak. GAO found that leading organizations prepare annual performance reports that clearly communicate performance results compared with the goals they established. Without external reporting of progress and results of the initiatives started under this system, external stakeholders, such as Congress, lack key information on what the business lines or departments were doing to improve Amtrak's financial or operational performance. As a result, these stakeholders may lack confidence in Amtrak's improvement efforts. Therefore, GAO recommended that Amtrak externally report how Amtrak's initiatives meet their established goals. In 2019, GAO confirmed that while Amtrak had discontinued its strategic management system, it had adopted a new, similarly designed system across all of its lines of business. Specifically, similar to the strategic management system, Amtrak's new system aligns business-line goals and initiatives to a corporate-wide strategy through a new corporate-wide blueprint that established a vision for the company and a set of corporate-wide strategic goals or pillars that are designed to implement Amtrak's vision. Amtrak also established corresponding initiatives in each business line and assigned personnel to implement each goal, such as to achieve a certain level of customer satisfaction or put Amtrak's safety program in place. Amtrak also measures and reports progress in completing these initiatives monthly to Amtrak's Board of Directors. In addition, all of Amtrak's current lines of business outline their progress each fiscal year and their plans to meet these goals over the next five fiscal years in an externally available report on Amtrak's website. By externally reporting the progress and results of its initiatives, Amtrak can enhance the confidence of Congress, the Federal Railroad Administration, and others in the company's efforts to improve its financial and operating performance.
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| National Railroad Passenger Corporation | To improve the consistency and completeness of Amtrak's financial reporting and to provide Congress with accurate information to make funding decisions, the President of Amtrak should make the format of its monthly performance reports and its 5-year financial plan consistent to show all of Amtrak's revenues and expenses by major function for each line of business. |
Amtrak provides a range of passenger rail services in the United States, including frequent service along the Northeast Corridor, shorter distance intercity services that receive some financial support from states along those routes, and long-distance services that connect rural areas and major cities. However, Amtrak had not consistently reported on the revenues and expenses for its different services. Amtrak reorganized in 2012 into lines of business to show revenues and expenses separately for its Northeast Corridor, state-supported, and long-distance services. In 2016, GAO reported that Amtrak's reorganization into separate business lines created a structure to improve accountability for financial and operational results, but Amtrak has not yet demonstrated results of this reorganization. Among other things, although Amtrak is required to report all of its revenues and expenses by route as well as by line of business, Amtrak's reporting of financial information by line of business is inconsistent and incomplete. For example, Amtrak's monthly performance reports show some of Amtrak's revenues and expenses by line of business but do not break out Amtrak's revenues and expenses by major function for each line of business. While Amtrak's 5-year financial plan provides direct and allocated expenses to each line of business, the plan provides revenue and expense projections in a format that does not easily align to the monthly performance report. The inconsistency between the two reports makes it difficult to compare Amtrak's past results with its future forecasts. Therefore, GAO recommended that Amtrak make the format of its monthly performance reports and its 5-year financial plan consistent to show all of its revenues and expenses by major function for each line of business. In 2020, GAO confirmed that Amtrak's reporting of its actual revenue and expenses in its monthly performance report aligned with its reporting of projected revenues and expenses by major function and business line in its new, annually issued, 5-Year Service Line Plans. By making its financial reporting consistent between its past performance and future projections across all of its major functions and lines of business, Amtrak can better demonstrate to external stakeholders, such as Congress, key information on how their lines of business are performing and what Amtrak is planning to do to further improve their performance.
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| National Railroad Passenger Corporation | To improve the consistency and completeness of Amtrak's financial reporting and to provide Congress with accurate information to make funding decisions, the President of Amtrak should ensure that Amtrak's depreciation expenses are appropriately allocated to its lines of business once the underlying capital asset data are determined reliable. |
Amtrak does not allocate depreciation to its lines of business in any of its financial reports. Instead, Amtrak officials told us that in response to a requirement in the Fixing America's Surface Transportation (FAST) Act enacted in December 2015, Amtrak allocates its capital expenditures by service line (Amtrak's current terminology for business lines) to provide additional transparency on the financial performance of each line. Amtrak officials also stated that Amtrak does not apply its group depreciation expenses by service line because of challenges associating with estimating the use of various shared assets, such as rail cars, by service line. Given the improvements in transparency into Amtrak's financial performance made by Congress in the FAST Act, and the challenges associated with revising Amtrak's depreciation method to implement our recommendation, we are closing this recommendation as not implemented.
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| National Railroad Passenger Corporation | To help Congress in assessing Amtrak's need for federal assistance for state-supported routes and to help Amtrak to develop strategies to reduce the costs of its services, the President of Amtrak should delineate the specific costs and activities for state-supported routes that are covered by the federal government and communicate this information to Congress, such as in Amtrak's annual budget request. |
Amtrak provides a range of passenger rail services in the United States, including frequent service along the Northeast Corridor, long-distance services that connect rural areas and major cities, and shorter-distance intercity services for 29 state-supported routes within 18 states. In 2006, GAO reported that the amounts paid by states for these routes varied widely and did not cover their full costs, with some states not paying anything at all for services, raising equity concerns among states. In 2016, GAO reported that Amtrak had implemented a standardized methodology for allocating its operating and capital costs for state-supported routes among the 18 states and Amtrak. As a result, states assumed a greater share of the costs of these routes. However, according to Amtrak, states' payments still did not cover the full costs of these routes, leaving a projected $360 million in operating costs to be covered by the federal government from fiscal year 2016 through 2019. Although Amtrak had requested from Congress an average of $90 million from fiscal years 2016 through 2019 to cover operating costs for state-supported routes, GAO found that Amtrak did not delineate the specific costs and activities that are to be covered with the requested federal funds. While Amtrak indicated that federal operating grants for state-supported routes are to cover general and administrative and other support services, Amtrak had not reported information in either of its grant requests to Congress for fiscal years 2015 or 2016 in a way that detailed the specific activities and costs that are not covered by states' contribution and which require additional federal operating grants. GAO reported that, without detailed information on the specific costs of the state-supported routes that are to be paid for by the federal government, Congress lacked information to assess Amtrak's use of federal assistance for state-supported routes. Amtrak also lacked information necessary to assess its costs and develop strategies to reduce the costs of its services. Therefore, GAO recommended that Amtrak delineate the specific costs and activities for state-supported routes that are covered by federal funds and communicate this information to Congress, such as in Amtrak's annual federal grant request. In 2020, GAO confirmed that Amtrak had delineated the specific costs and activities for state-supported routes that are to be covered by the federal government through its annual grant requests to Congress for both fiscal years 2020 and 2021. For example, in its fiscal year 2021 grant request, Amtrak requested approximately $252 million in federal grants for its state-supported routes, and estimated that it would receive an estimated $1.1 billion primarily in revenues from those routes and contributions from states to cover the remaining operating and capital costs. In addition, Amtrak specified that it would use more than $196 million of the federal funding for capital expenses, and the remaining $56 million to cover operating expenses. Amtrak also specified that all of the federal funding would be used for operating and capital costs for Amtrak's equipment, infrastructure, and stations and none of the federal funding would be used for Amtrak's company-wide functions, such as, legal, finance, government affairs, human resources, and information technology. As a result of the improved specificity in its federal funding requests, Congress now has better information to assess Amtrak's need for federal assistance for state-supported routes, and Amtrak has the information necessary to assess its costs and to develop strategies to reduce the costs of its services that are covered by the federal government.
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| Northeast Corridor Commission | In addition, to better inform congressional decision making regarding the funding of Northeast Corridor infrastructure improvements, the Northeast Corridor Commission should work with its members to establish criteria for its members to use in selecting and prioritizing capital projects to be included in future editions of its 5-year capital plan. |
In 2016, GAO reported that many of the Northeast Corridor's (NEC) bridges and tunnels are aging and in need of replacement to bring them to a state of good repair. GAO reported that the Northeast Corridor Infrastructure and Operations Advisory Commission (Commission)-whose member agencies includes the Department of Transportation, Amtrak, states, and others-developed a 5-year capital plan to begin addressing the backlog of deferred capital investments. However, the Commission had not yet developed a formal process for selecting and prioritizing projects in its 5-year capital plan. Leading organizations evaluate and select capital projects using an approach that focuses resources into investments that provide the greatest benefit over the long term. Such an approach includes, among other things, defined processes for ranking and selecting projects based on pre-established criteria. Commission officials stated that the projects in its 5-year capital plan were not prioritized and ranked, in part, because this was the first time this kind of an effort had been undertaken with Amtrak and the region's commuter railroads that use the NEC. Commission officials also stated that they would like to develop a more formal process for Commission members to prioritize investments in future capital plans, but that implementing a more formal and consistent approach for prioritizing and selecting projects would be challenging. GAO reported that without such a process for prioritizing and selecting projects, the Commission lacks an important tool to demonstrate how investments would be prioritized, which could help inform the decisions of Congress and states about whether to provide additional funding. Therefore, GAO recommended that the Commission work with its members to establish criteria for its member to use in selecting and prioritizing capital projects to be included in future capital plans. In 2022, GAO confirmed that the Commission has taken actions sufficient to meet the intent of this recommendation to inform how investments would be prioritized to inform future funding decisions for NEC infrastructure improvements. Specifically, in July 2021, the Commission released a 15-year service development plan and infrastructure planning process for the NEC. According to the Commission, this new plan is a multi-agency action plan guided by a long-term vision to provide a detailed and efficient sequencing of infrastructure investments over 15 years. As part of this document, member agencies identified infrastructure investments needed to achieve their service objectives and bring the NEC to a state of good repair. The Commission also developed a new integrated capital project delivery and operations analysis tool that, among other things, gathered the scope, schedules and cost estimates of capital projects and grouped projects together based on geography, construction requirements and interdependencies along the NEC. The Commission used this analysis tool to compile a combined capital project list grouped geographically and by component (such as major structures or track) into projects that either enhanced capacity and speed or as renewal efforts to bring the NEC to a state of good repair. Although this plan does not contain specific criteria for prioritizing capital projects on the NEC, it does contain a structured process for prioritizing groups of capital projects that can be done concurrently in each region based on operating constraints. Furthermore, while the Commission included this process in its new 15-year service development plan rather than the 5-year capital plan as recommended by GAO, this process will provide the Commission and its members with a longer-term framework to efficiently design and program groups of projects together to conserve resources. As a result, Congress and states have better information as to how capital projects are prioritized to help inform their funding decisions.
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