In St. Joseph, Colgan's compensation goes under the microscope by PSRS
September 14, 2015
By Sam Zeff
An investigation by Ballotpedia into how former St. Joseph school superintendent Dan Colgan funneled tens of thousands of dollars into his paycheck to boost his pension has sparked action by state pension officials and the IRS.
In July, Ballotpedia uncovered how Colgan quietly raised his pay with stipends, annuities and car allowances. Using methods that few in the district or on the Board of Education knew about, Colgan was able to boost his 2002-2003 school year base pay of $108,700 to a staggering $185,892 for a 71 percent increase. He used similar tactics to inflate his 2001-2002 contract and his 2003-2004 deal with the district.
The pensions of educators in Missouri are based on their three highest earning years. Some in Missouri refer to these years as "the big three." Ballotpedia discovered that Colgan was able to boost his lifetime retirement pay by about $2,500 a month, or more than 22 percent, by inflating his salary.
Steve Yoakum, executive director of the Missouri Public School Retirement System (PSRS), says the Ballotpedia investigation combined with a scathing report from the Missouri State Auditor released in February led to the review of Colgan's reported income by the organization. "Yes, without a doubt, [Ballotpedia's] reporting had a lot to do with this," Yoakum said. "We’re going back and reviewing the compensation to see if it was actually correct."
In addition, sources say, Ballotpedia's Colgan investigation was one reason that the IRS audit of the district, which was scheduled to take only a few days in August, will now stretch through most of the school year. The IRS says it does not comment on any audit to protect taxpayer privacy. It is clear, however, that the IRS is not conducting a criminal investigation.
"To me, the PSRS review is a natural progression from the facts uncovered during this whole process," says school board member Kappy Hodges. "I think they should check into other top administrators payroll reports too. If everything is in line, that’s great, but if not it needs correcting as well."
Hodges is most likely referring to controversial compensation given to former Superintendent Melody Smith, who took over the district after Colgan retired in 2006, and some of her leadership team. Smith is now an interim assistant dean at Missouri Western University in St. Joseph.
A few days after the Ballotpedia investigation was published in July, PSRS sent a letter to the St. Joseph School District demanding all of Colgan's contracts from the 1997-1998 school year to the 2004-2005 school year, which was his final contract before retirement. Colgan was the district's superintendent for 14 years.
A month later, PSRS sent a follow-up letter to the district stating that three contracts weren't provided. By early September, Yoakum says, those contracts were still missing.
The August letter is from Jeffrey Russler, who is the director of employer services for PSRS. In it, he tells the district that "since the employer payments to the tax-sheltered annuity and the car allowance detailed in his contracts are fringe benefits that are not part of retirement salary," they are being disallowed from Colgan's retirement calculation.
Ballotpedia uncovered that Colgan had two years of unusually high car allowances. He received $11,300 in 2002 and $14,450 in 2003. He received tax-sheltered annuities in 2001 and 2002.
As a result of the review, PSRS could not only reduce his monthly retirement income but also sue for any overpayments. "If we think there’s an overpayment we will go after it," says Yoakum. "We’re not shy about recovering overpayments."
In 2009, PSRS sued former Liberty Superintendent Scott Taveau for $200,000 in overpayments.[1] That case is on appeal after a Cole County judge ruled the retirement system could withhold payments to recover Taveau's ineligible benefits.
In addition, if PSRS believes there was fraud, it could report the results to federal or state law enforcement officials.
"It's very disappointing. I worked in the district back then and it never occurred to me that pension reports might be compromised," says board member Chris Danford. "Where were the HR people? Or the finance people? Where were the checks and balances?"
Colgan did not return a telephone message seeking comment. Former St. Joseph School Board President Leo Blakley, who signed one of the contracts now in question, said he knew about the PSRS review and would have to review the matter further before cutting off the call.
Colgan was also granted health insurance coverage for life by the school board in his 2002 contract. Ballotpedia discovered that St. Joseph taxpayers have paid more than $20,000 for Colgan's health coverage since 2011. Some on the school board are examining ways to cut off that coverage.
Musser resigns
This week, Chief Financial Officer Beau Musser announced he would resign in October. Musser helped blow the whistle on $5,000 stipends secretly given to 54 administrators two years ago. He was falsely accused of sexual misconduct when he expressed his concerns to former Superintendent Fred Czerwonka. He sued for slander and eventually settled for $450,000.
Musser hasn't said where he's going, but it's widely believed he will return to the private sector.
Sam Zeff covers education for KCUR in Kansas City, Mo. 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
- Dan Colgan
- St. Joseph School District, Missouri
- St. Joseph School District scandal
- List of school districts in Missouri
- Public education in Missouri
- Public pensions in Missouri
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