Stipend scandal erupts in St. Joseph, Missouri

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An introduction to St. Joseph, Missouri

June 30, 2014
By Sam Zeff

When Chris Danford walked into the gym at Bishop LaBlonde High School in St. Joseph, Missouri for a January game against Chillicothe, she thought it was going to be just another night watching basketball. It wasn't. What she gleaned that night as she waited in line to buy snacks would spark a whistle-blower lawsuit, an audit by Missouri state officials and a criminal investigation by the FBI.

"I thought it was a little problem but it turns out it’s like an iceberg," says Danford now, five months after a chance encounter that would plunge the 16th-largest school district in Missouri into crisis and change the way she views public education. "It just keeps going, and going, and going. And it’s discouraging."

Danford had been on the St. Joseph Board of Education for about 18 months, after a 25-year career as a teacher and counselor in the district, when she heard from a parent at the basketball game that the district was handing out $5,000 bonuses.

This was a district that had just cut $3 million from the budget.

Danford couldn't believe the information she'd just heard was correct.

It turns out the district, at the direction of a new school superintendent, secretly doled out $270,000 to 54 administrators, from associate superintendents down to assistant building principals.

Not only did Superintendent Fred Czerwonka hand out the bonuses, he did so without approval from the Board of Education. This not only violates board policy, Danford says, but might violate Missouri and federal laws.

Since April 10, 2014, the Missouri State Auditor has had a five-person team embedded in the district’s headquarters in downtown St. Joseph. Spokesperson Spence Jackson says the team is conducting both a performance audit and a forensic audit and will be there through the early fall.

The U.S. Department of Education is said to be doing its own investigation. Catherine Grant, a spokesperson for the Office of Inspector General, will neither confirm nor deny a probe.

And then there’s the Federal Bureau of Investigation, which has already conducted dozens of interviews.

Missouri-Stipend Scandal.jpg
Learn more about the scandal in
the St. Joseph School District...
The story so far
The stipend scandal
The FBI probe
The rescinded suspension
The $2 million shortfall
The secret tapes
The ousted administrators
The state audit
The fallout begins
The superintendent axed
The firings continue
The board resignation
The video recap
The investigation spreads
The lawsuit settlement
The settlement details
Key figures
Superintendent Fred Czerwonka
CFO Beau Musser
COO Rick Hartigan
HR Director Doug Flowers
Trustee Chris Danford
Trustee Dan Colgan
State Auditor Thomas Schweich
State Sen. Robert Schaaf
St. Joseph School District
2014 school board election
2015 tax levy renewal
Missouri Department of Elementary and Secondary Education
Missouri State Auditor

New superintendent nicknamed The Candy Man

St. Joseph is a city of around 80,000 people about 50 miles north of Kansas City. Hard up against the Missouri River, St. Joseph is best-known as the birthplace of the Pony Express and as the town where Jesse James was shot dead.

A once vibrant downtown is now pretty much deserted during the day except for people who have business at the county courthouse or state office building.

The St. Joseph School District has about 11,000 students and is the third-largest employer in the city. It has a reputation for below-average pay and, say those who’ve been associated with the district for many years, a rocky relationship with teachers.

Dr. Fred Czerwonka took over as superintendent last July. He came from a smaller school district near the Lake of the Ozarks in Southern Missouri where he had risen through the ranks to become superintendent.

Just weeks into his tenure, Czerwonka, according to district officials, got a rebate from the district’s insurance company.

Board policy dictates that that money be reported to the board and then deposited. However, according to Danford and others in the district, Czerwonka decided to divvy up the money among administrators.

St. Joseph Superintendent Fred Czerwonka, nicknamed "The Candy Man"

In certain circles around the district, Dr. Czerwonka was now nicknamed "The Candy Man."

But it was his decision not to inform the board about these $5,000 stipends, a decision he admitted to and apologized for in an open meeting, that led to the current investigations and a smoldering disdain among many of the district’s teachers and patrons.

"It’s not about educating students," says local NEA President Todd Brockett. "It’s about bloating administrative salaries."

Brockett teaches middle school history and computer-aided design. He’s taught in the St. Joseph School District for 23 years and, like almost everyone connected to this story, is a native who loves his hometown.

Czerwonka is a seasoned school administrator. So why would he do something that clearly violated board policy?

"I think he was buying loyalty," says Danford. "What’s a quick way to come into a town where you know nothing, you know no one? People have been in their jobs forever. In fact, some of the people downtown applied for that job. What’s the quickest way that you can make everyone happy? Give them more money."

All of this came to light at a Board of Education meeting in March.

A month later, Czerwonka justified it at another board meeting. He admitted he created a "massive mess."

But in a passionate speech during that April board meeting, he argued administrative salaries were low, top administrators were departing and morale was bad.

The district wouldn’t make anyone available for an interview, saying administrators were busy doing job interviews and fulfilling document requests for a lawsuit, the State Auditor and the U.S. Attorney.

Czerwonka did issue a statement. "Stipends are given for extra work or duty performed outside the normal work day. Extra work and responsibility were required to be performed, therefore the stipend amount was increased accordingly."

More stipends come to light

St. Joseph School District headquarters

The $5,000 Candy Man stipends, it turns out, brought to light a raft of other stipends the board neither approved nor even knew about.

"You have a system of bloated bureaucracy," says Brockett. "Stipends have become a method to increase salaries."

The top of the salary scale for St. Joseph administrators is $97,700. Administrators are eligible to receive additional stipends for longevity, credits toward graduate degrees and National Board Certification, which results in many of the administrators making around $100,000 per year.

With a median income of $42,248 (below the state average) and a poverty rate of 18.4 percent (above the state average), this made administrators in the St. Joseph School District among the most well-off in the community.

In fact, the district reported administrator salaries to the St. Joseph News-Press that were thousands of dollars less than these administrators were actually making.

The board and the public discovered there were lots of extra ways administrators got stipends. They were paid thousands extra for night duty and local travel. If you were on something called the Superintendent’s Council, you got an extra $9,000 per year. There was a different group called the Superintendent’s Cabinet where members received an extra $2,800 per year. Associate superintendents got an extra 15 percent of their salary.

There was even a stipend simply labeled "additional" that added thousands of dollars per year to some administrators' salaries.

There were also stipends for teachers and other staff whom the board had not approved. Extra money was given for cell phone reimbursements, on-call maintenance and an ROTC coordinator.

And none of this was known to the board or public until The Candy Man stipends were revealed.

"What I didn’t know was that there’s been this process of essentially hiding lots of compensation of administrators from the board for decades," says former district Chief Financial Officer Beau Musser, who is now suing the district for wrongful termination, retaliation against a whistle-blower, slander and breach of contract.

School board CFO finds problems

Former St. Joseph CFO Beau Musser

Musser is 35 years old. He graduated from Benton High School in South St. Joseph and left the private sector to work in education.

"The day I got this job it was arguably, it was the best day of my life," says Musser while sitting in his Kansas City lawyer's conference room, giving Ballotpedia his first interview to a reporter since the scandal broke back in March.

Musser was the CFO at a heavy construction company when the school district job opened up. While he didn’t take a pay cut, he says, leaving the private sector certainly limited his future earnings.

"It really was an opportunity to really make a difference," he says.

But it didn’t take long for Musser to find problems, serious problems.

According to the lawsuit, Musser uncovered irregularities on his second day at work.

He discovered the district couldn’t account for 4,000 gallons of fuel. That Dr. Czerwonka hired two consultants for a total of $189,000 without getting board approval. And that multiple vehicles and a spa was purchased by a high school without bids and without board approval. All of this violates district policy.

In its response to the lawsuit, the district denied all of these allegations.

Musser says he took his concerns to other administrators but they were ignored.

But what happened in early July, he says, really floored him.

That’s when the district’s director of human resources, Doug Flowers, walked into his office with a list of people who were to get the now infamous $5,000 Candy Man stipends. Musser’s name was on the list.

"I was surprised by it because we didn’t have board approval for it. The director of HR said that the superintendent had it within his authority to do these pay raises," Musser says. "They tried to keep this as secret as possible."

The secret would hold for several more months. But when it finally broke, Musser would face something he never imagined.

Charges of nepotism

St. Joseph HR Director Doug Flowers

But there was another problem percolating. Relatives of top district officials had big jobs in the district and now they were up for promotions and, in some cases, $15,000 per year raises.

Superintendent Fred Czerwonka’s wife, Wendy, was given the job of homeless coordinator when the couple moved to St. Joseph. That job, according to district insiders, was previously handled part-time by another district employee.

The wife of Human Resources Director Doug Flowers, Tammy, was the district’s early childhood coordinator. While her job duties didn't change, her title is now technical director and with that she just got a $10,500 per year raise.

The Czerwonka family and the Flowers family together account for about half a million dollars per year in salaries from the St. Joseph School District.

"I was disgusted beyond measure by this," says the NEA's Brockett.

St. Joseph Board of Education member Dan Colgan

But the promotion that is, perhaps, the most troubling to many involves the son of the former school board president, Dr. Dan Colgan. Colgan is also a former superintendent and he still serves on the Board of Education.

His son, Mark, was the supervisor of the district’s warehouse. He was also just given the new title of technical director, which came with a $15,527 raise.

But what many can’t figure out is why Mark Colgan doesn’t actually work at the warehouse. His office is two and a half miles away.

The district says he works at a different location because that’s where the people are with whom he interacts the most.

But there is an even more troubling allegation.

Multiple sources in the district say Dan Colgan would approve the Candy Man stipends when he was board president if, and only if, his son Mark was given a promotion and raise.

Reached by phone Dan Colgan said that is "false" and "absolutely ridiculous. There’s a lot of foolish things out there."

Again, in a written statement, Czerwonka denied any nepotism.

"We do not discriminate based on an individual's name, last name, or who they are married to; we hire the best qualified candidate. The Board of Education hires and fires all employees. Board policy was followed accordingly. There are many spouses and relatives that work in the St. Joseph School District, one of the largest employers in the city."

CFO placed on leave; sues school board

All of this, the $5,000 Candy Man stipends, all of those other administrative stipends and the controversial promotions, came to a head at the March 24 Board of Education meeting.

St. Joseph Board of Education member Chris Danford

Board member Chris Danford, to the surprise of the administration, told the whole story in public session.

She was angry. "It’s not the board’s money," says Danford. "It’s taxpayers dollars. I don’t represent the teachers. I don’t represent the administrators. I represent the taxpayers."

As she was spilling the beans, Danford thought she was the only board member who knew about the Candy Man stipends.

But former CFO Musser says he was also fed up and worried that the stipends he paid out were illegal under Missouri law. So ethically, he says, he had to tell the chair of the board’s audit committee.

The secret was now out.

For Musser, it was the beginning of the end of his short career with the St. Joseph School District.

Four days later, according to his lawsuit, Musser was called to the superintendent’s office and accused of multiple allegations of sexual harassment. The lawsuit also claims that Dr. Czerwonka offered to "drop the allegations of sexual harassment in exchange for Mr. Musser’s resignation."

Instead of resigning, Musser sued the school district.

While he remains on paid administrative leave, he says this whole thing has been brutal on his family.

His brother and sister-in-law are teachers in the district. The best man at his wedding, also a teacher, has stopped calling because he’s afraid of losing his job, says Musser. "My best friend from kindergarten who’s an eighth grade teacher, I haven’t heard from him since this whole thing went down. Not one time."

This has also been an emotional ride for Danford. Many of the people at the center of this, she says, are people she’s known for 25 years.

"I wasn’t a big buck person," she says. "So, I don’t know, maybe when you make that kind of money maybe it becomes all about that. I just don’t know. A lot of them are mad at me because they think I’m the Candy Man murderer."

More financial problems loom

FBI resident agent office in St. Joseph

So now the district is up to its ears in investigators. Probably the most troubling investigation is the one by the FBI. A grand jury sitting in Kansas City has also issued a subpoena for documents. As if a possible federal indictment, a probable scathing report from the State Auditor and defending the Musser lawsuit aren't enough problems for the district, it has a couple more.

The St. Joseph News-Press reports that two local office furniture suppliers are concerned that bidding for furnishings at the two new public schools opening in August was structured to fit out-of-town firms. One firm that won a bid was Kansas City-based School Solutions Incorporated. Walt Hanabury, a former district elementary principal, is an SSI sales representative. Mr. Hanabury told the News-Press he had no inside leverage in the bidding process.

One more looming problem for the St. Joseph School District: Its property tax levy sunsets next year unless voters renew it. St. Joseph school officials were hoping to increase the levy to raise more money. However, voters could reject it and, in fact, there’s a chance the property tax rate could drop, leaving the district with less funding.

"The rage is palpable in the community and they’re not going to pass this levy with the current administration," says Brockett.

Danford says this is a total collapse of district leadership. "I’ve been in conferences as a school counselor where we reamed kids, where we expelled kids from school for less. We have higher expectations of our students than we do for our leadership. That drives me crazy."

Journalist Sam Zeff

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.

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