Colgan inflated compensation by tens of thousands of dollars while St. Joseph School District struggled
July 10, 2015
By Sam Zeff
Dan Colgan has lived his entire life in St. Joseph, Missouri. For more than 30 years, he served in various jobs in his hometown school district. However, Ballotpedia has discovered that during the last 14 years of his career, when Colgan was superintendent of schools, he focused much of his efforts on enriching himself and not the district he had sworn to serve. While the district was scrambling to hire staff and buy books, Colgan managed to steer tens of thousands of dollars into his paycheck during his final three years as superintendent, thereby guaranteeing himself a substantially larger state pension. Records show that Colgan’s total compensation was inflated by 71 percent at a time when the district was trying to make ends meet.
The web of payments was so convoluted it’s impossible to examine Colgan’s contracts and determine exactly how much he was paid. Complicating matters further, the district cannot find minutes of some board meetings showing that these payments were approved, nor can the district account for some of the money. None of these concerning revelations would have come to light without the discovery of $5,000 stipends paid to 54 top administrators in 2013 by then-Superintendent Fred Czerwonka. His brief two-year tenure in St. Joseph came to an abrupt and dramatic end following a brutal report from the Missouri state auditor.
When news of the $5,000 payments broke, many residents thought it was an isolated incident. But it opened the door to much deeper problems, including a culture of questionable payroll practices, nepotism and secrecy. Especially concerning is the fact that many matters were not disclosed to the school board.
“As a board member, you don’t know what you don’t know,” says St. Joseph Board of Education member Chris Danford, who helped blow the whistle on the stipends and has been the main agitator for change as the scandals have unfolded. “You may think that there’s this contract and this is what it said and this is what that person is getting paid and then you see later that didn’t happen at all.”
Colgan’s compensation is a prime example of such abuses. During the 2002-2003 school year, Colgan’s compensation ballooned higher than most taxpayers and citizens realized. His contract called for a base salary of $108,700, certainly a handsome sum but not an unreasonable one for a school superintendent serving a district of 11,000 students and more than 1,000 teachers.
The amount Colgan made that year became the cornerstone for three years of huge pay increases, resulting in a substantially higher pension upon his retirement in 2006.
But until now only a small handful of people really knew how much Colgan was taking home. “For 14,15 years nobody knew. I have to think he must have thought, I’m home free,” says Danford.
The board first granted Colgan a $25,000 stipend in 2002. His contract labeled this a “taxable annuity,” but payroll records simply called it a stipend. This payment method has since become synonymous with the St. Joseph scandals.
In addition, Colgan’s 2002-2003 contract called for an $11,000 “tax-sheltered annuity” and an $800 monthly car allowance, or $9,600 over the entire school year. Upon adding these numbers, one might assume Colgan made a total of $154,300 that year. But, as Ballotpedia discovered, there’s even more to this story, and following the money requires researching two different sources.
Payroll records obtained under the Missouri Sunshine Act reveal Colgan’s car compensation in 2002 was actually $11,300. The district, through its attorney, says it is unable to account for the extra $1,700.
There’s more, however, and tracking it requires something called a “standard transmittal of employee information,” a document used to communicate between human resources and the business office. These transmittals were also obtained through the Sunshine Act.
The transmittal from 2002 shows Colgan was paid an additional $4,000 for his graduate degrees, $4,900 for longevity and $1,200 for something called “national convention.” After adding in some other benefits, his total compensation for 2002-2003, the total amount that was reported to the Public School Retirement System of Missouri, was a staggering $185,892. This 71 percent increase is $77,192 more than his base salary of $108,700.
Danford was a St. Joseph district school counselor in 2002 and said those were lean budget years. At the time, Colgan often said staff had to do more with less. “So here’s a guy who talks so much about kids. He’d come to staff meetings and say, we really need to work harder to reach those kids and at the very same time he’s feathering up his bank account.”
In a letter, long-time school district attorney Steve Briggs said Colgan’s contract called for him to “receive all other benefits provided to other employees, which would include grad credit and longevity.”
While that may satisfy the spirit of the contract, it’s not truly transparent. “The transparency is not what you would expect it to be with public money,” says Steve Fleming, who was HR director with Liberty Public Schools in suburban Kansas City for 24 years. People should be able to look at a school superintendent’s contract and know what they make, he says. “If you think the superintendent is worth $175,000 then pay the man or lady $175,000 instead of this.”
Transparency was and is an issue for the St. Joseph School District. In fact, the first sentence in the Missouri state auditor’s report criticizes the muddled way it pays people, calling it “a confusing, inconsistently applied and poorly documented system of compensation.”
It’s hard to know just how much the full board of education knew about Colgan’s compensation leading up to his retirement.
While Briggs says in his letters that Colgan’s contracts were approved by the board, minutes that the board posted on its website do not show board approval in open sessions. Minutes from closed executive sessions, which were provided after a Sunshine Act request, show only that Colgan’s 2004-2005 contract was approved; the district could not locate minutes detailing the approval of his other contracts. All contracts were signed by the member serving as board president at the time.
While the state auditor did not investigate board procedures in 2002, he did say the school board committed numerous open meeting violations in 2012. “The board does not always made [sic] public the final disposition of legal matters or contracts discussed and approved in closed meetings,” the report stated.
Colgan, our investigation shows, used similar tactics to boost his pay in the 2001-2002 and 2003-2004 school years. His 2001-2002 contract included a base salary of $105,500, a tax-sheltered annuity of $10,400 and a car allowance of $9,600, for a total of $125,500. But the salary reported to the retirement system that year was $148,801. Between 2001-2002 and 2002-2003, Colgan’s total pay had increased a whopping 25 percent.
In 2003-2004, his total salary reported to the state was $181,100. That year, he got another $25,000 stipend and a $14,450 car allowance. The district was unable to explain why his car allowance was so large.
The purpose of all this was for Colgan to substantially boost his retirement pay, say school HR and business office experts.
Using a publicly available online calculator from the Public School Retirement System, it’s easy to get a fairly accurate pension amount using all the data Ballotpedia gathered. Educators’ pensions are based on several factors, the most important of which being their three highest consecutive salaries during their careers. For Colgan, the 25 percent raise between 2001-2002 and 2002-2003 was key. That moved his average salary from around $140,000 per year to approximately $170,000 per year.
Consequently, Colgan’s pension could top out at more than $13,500 per month or about $162,000 per year. If not for that huge pay hike, his pension would have amounted to about $11,000 per month or approximately $132,000 per year. By knowing how and when to boost his pay without public scrutiny, Colgan increased his pension for life by more than 22 percent.
It’s also important to know that before Colgan became superintendent, he was the district’s human resources director. In fact, Colgan created the HR office. Fleming, who is now employed with a charter school in Kansas City, Missouri, says Colgan would have known exactly how to make all this come together. “If you deal with contracts on an annual basis, you understand how they work and what has to be reported and what can and shouldn’t be included.”
“Clearly he would know all the ins and outs of all the different stipends, additional money, raise the car allowance, all of that,” says board member Chris Danford. “It just floors me that other people said that’s okay to do. Unless nobody was keeping track?”
But Colgan’s inflated pension isn’t the only cost to taxpayers. He was given some unusual cash payments leading up to the conclusion of his tenure as superintendent. Payroll records show that on June 30, 2005, about a year before his retirement, the school district wrote Colgan a sizable check. He was granted a $15,000 retirement bonus by the board, and he was also paid $4,500 for unused sick leave.
While many school district employees cash in unused sick time, it’s unusual for a school superintendent to do so. Colgan also received two payments totaling $13,405 for unused vacation time, despite his contracts clearly stating, “The annual vacation shall be taken during the contract year in which it is earned and shall not be cumulative.”
Representatives from the district were unable to say who authorized Colgan’s payment for unused vacation time, though they did explain that Colgan’s unused sick time payment was calculated the same way as that of everyone else in the district. In other words, his contract did allow for such payments.
“I really am stunned with those numbers that he got paid. Because when you look at those numbers and you put them back in those years he took home that salary, that’s huge. That would be making so much more than anyone in the district or anyone (working) for the city,” says Danford.
But there is one more gem in Colgan’s retirement package that St. Joseph taxpayers are, to this very day, paying for. In a contract signed on July 1, 2002, the board agreed to provide Colgan with “medical insurance for life” and clarified that it “will be secondary after Medicare coverage becomes available” after his retirement. The state auditor’s report singled out this provision when it severely criticized the district’s compensation policy. The auditor said, “The district paid approximately $4,600 for Dr. Colgan’s 2013 medical insurance.”
It turns out it was much more than that, however, because the district is also paying for his portion of Medicare. According to a summary from the district’s business office obtained through the Sunshine Act, the district paid for his monthly Medicare benefit, his additional Part B benefit and a Part D income adjustment. That was an additional $3,011 in 2013. So the total bill to taxpayers for Colgan’s health care in 2013 was $7,642. Since 2011, documents obtained by Ballotpedia show, the district has paid $20,329 for Colgan’s health care. “You just don’t count on people in education to take advantage of the district. Because who loses? The kids lose,” says Danford. “Those kids lost out every year. Every year. And there’s no make-up for that.”
Reached on his cell phone, Colgan had little to say except, “I’m on vacation and I really have no comment.”
Ballotpedia also made several attempts to interview the three school board presidents who signed his contracts on behalf of the district between 2001 and 2006.
Colgan’s 2001 contract was signed by David Hornaday, school board president at the time. This contract is notable because the district had never before agreed to lifetime medical insurance. “If the Board of Education offers to employ the Superintendent for the school year beginning July 1, 2003, and the Superintendent agrees, the Superintendent will receive District paid medical insurance for life,” according to the contract.
Hornaday, a longtime executive at WireCo, a major employer in St. Joseph, did not return phone calls seeking comment. Hornaday is now retired from WireCo.
Colgan’s next contract was signed by Dr. Teresa Humphreys, a local psychologist. The 2002-2003 contract is significant because it’s the first time the board granted Colgan the first of three consecutive $25,000 yearly stipends. Humphreys also did not return several calls. The final contract again mentions medical insurance for life and was signed by then-school board president Leo Blakley, who is now on the Board of Governors of Missouri Western State University in St. Joseph.
Blakley did agree to comment but then backed out after several follow-up calls.
Sam Zeff is a freelance journalist in Kansas City, Missouri. He's won a National News Emmy for investigative reporting, four National Headliner Awards and four Edward R. Murrow awards. Zeff has managed newsrooms in Minneapolis, St. Louis and Kansas City. He was educated at the University of Kansas.
See also
- St. Joseph School District, Missouri
- St. Joseph School District scandal
- List of school districts in Missouri
- Dan Colgan
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