Update: April 26 at 10:15 am
The Missouri Public Schools Retirement System said in a letter to the St. Joseph District that Dan Colgan's retirement date was moved from July 1, 2005 to January 1, 2006. That means he improperly received pensions benefits for six months.
In what is the largest settlement in the history of the teacher’s pension system in Missouri, the former superintendent and school board president in the St. Joseph School District will pay back $660,000 in retirement benefits he did not earn.
According to sources, Dan Colgan and the Missouri Public School Retirement System (PSRS) reached an agreement on the settlement a week ago.
The settlement comes months after KCUR and Ballotpedia.org uncovered how Colgan quietly inflated his salary over the last three years he was St. Joseph superintendent to significantly boost his monthly pension payments.
PSRS has been investigating Colgan’s pension since last September. Sources say investigators had trouble locating some of Colgan’s contracts and other district documents.
Colgan will not have to write a check for the money he owes. PSRS will withhold part of his pension until the $660,000 is repaid. Some of the money will go back to the district for its contributions to Colgan’s retirement account.
"The community has been looking for accountability, that's what this community has been looking for," says Board of Education member Kappy Hodges. "That's what I want, too."
Until now, the largest recovery of unearned pension benefits by PSRS involved former Liberty Superintendent Scott Taveau. He ended up owing about $225,000 to the retirement system.
Colgan did not return a call seeking comment about the settlement.
Colgan used annuities, stipends and inexplicably large car allowances to inflate his earnings. By doing so he was able to boost his retirement benefit by $2,500 a month, or about 22 percent.
"It is discouraging that Colgan constantly said it was all about the kids when, in fact, it was about padding his retirement," says St. Joseph NEA President Todd Brockett. "He let a lot of us down and his actions will cause harm to students now and into the future due to public distrust."
It’s estimated that Colgan could have been receiving a yearly pension of about $162,000 since he retired in 2004.
"I'm really disappointed by further evidence of financial wrongdoing," board member Chris Danford, who helped blow the whistle on some of that wrongdoing. "People running our district let us down. Students lost opportunities."
Here's just one example of how Colgan increased his pay: 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, a 71 percent increase. That year he received a $25,000 stipend, an $11,000 tax-sheltered annuity and a $14,450 car allowance.
He used similar tactics to inflate his 2001-2002 contract and his 2003-2004 deal with the district.
Colgan spent his entire 30 year career in the St. Joseph School District, the last 14 years as superintendent. He also created the district’s HR office so he knew, better than most, how the pension and compensation systems worked.
PSRS has suggested that now that the Colgan investigation is complete it may look into the pensions of other former St. Joseph school district administrators.
At the same time Colgan was inflating his pay, teachers and school board members have said, the district was struggling to pay staff and buy books.
Colgan was granted another perk that most retired educators don't get: lifetime paid health coverage.
His 2002 contract granted him health care, something that's already cost the district tens of thousands of dollars. That benefit was rescinded by the board last September.
This benefit was singled out in a scathing Missouri State Auditor's report released last February. At the time, the Auditor gave the district a rating of poor. Since that time the Auditor has said the district has made significant progress.
After he retired, Colgan was elected to the school board where he was president when the scandals that continue to plague the district of 11,000 students came to light.
None of this would have become public without the stipend scandal that broke almost two years ago. At that time, it was revealed that former Superintendent Fred Czerwonka handed out $5,000 payments to 54 administrators without school board approval.
Since then the district has settled a slander lawsuit with its former CFO for $450,000. It ran afoul of the Missouri Department of Elementary and Secondary Education (DESE) in December 2014 when it improperly received $2 million in aid for unapproved summer school classes. In the last two years, the district has gotten six subpoenas from a federal grand jury in Kansas City and the FBI continues to investigate the district.