Vernon official relieved of duties pending city review of finances


One of California’s highest-paid public employees has been relieved of his duties while Vernon officials conduct a “comprehensive review” of his and his wife’s financial dealings with the well-heeled industrial city.

In addition to his annual salary of more than $380,000, Donal O’Callaghan, a city administrator, also received $243,898 in consulting payments from the city through the first half of this year.

The additional money came because of a pay structure that allowed him and other top Vernon officials to bill for extra hours worked each month. O’Callaghan billed $300 an hour for time worked in excess of 160 hours a month — an arrangement equivalent to overtime that is unusual for salaried workers and all but unheard of in the public sector.

The $243,898 was paid through Tara Energy Inc., a consulting company headed by O’Callaghan’s wife, Kimberly McBride O’Callaghan, according to city documents reviewed by The Times. Vernon officials were at a loss Friday to explain why the payments had been routed through Tara.

“Part of what we are going to be looking at in terms of this review is why was that done and how did it get accomplished,” City Atty. Laurence S. Wiener said.

O’Callaghan was Vernon’s city administrator and director of light and power until July 21, when he abruptly stepped down to become head of capital projects for the city-owned power plant.

He had a similar two-tier pay system last year, when he earned a salary of $388,000 and additional consulting payments of $396,378. That works out to 1,321 extra hours, meaning that if O’Callaghan had worked every week of the year, he would have been claiming 25 extra hours each week.

For this year, O’Callaghan billed for 100 to 126 excess hours each month from January through June, earning about $30,000 to $38,000 per month in fees paid to Tara Energy, according to records obtained by The Times this week. He did not take a single full day off during the first six months of this year, according to his billing sheets, which show hours worked under “standard time” or “contract service,” or some combination of both, on every date from Jan.1 to June 30.

On New Year’s Day, he clocked 13 hours.

In a written response to The Times’ inquiries, interim City Administrator Mark Whitworth said that O’Callaghan had been put on paid leave for 30 days pending Wiener’s review.

Wiener said he will examine O’Callaghan’s relationship with Tara. Online state records show that the firm was incorporated Nov. 18, 2009, with Kimberly O’Callaghan as its president and sole officer. It is unclear whether the company, whose listed address is in the Bay Area city of Richmond, had any other business aside from the consulting work Donal O’Callaghan conducted for Vernon in the first half of this year.

Wiener said he also will investigate a three-month stint in early 2009 when Kimberly O’Callaghan earned about $13,000 on a city contract as a $40-an-hour bookkeeper at the light and power department, which was then overseen by her husband. Wiener and Whitworth, who also is Vernon’s fire chief, said they did not know if her work under her husband’s supervision violated city policies.

In a brief interview outside his Pasadena home Friday afternoon, O’Callaghan said he could not answer questions about Tara Energy or his wife’s employment by the city.

“I really am not in a position to comment on anything at this time,” he said.

The city’s review comes in the wake of The Times’ disclosure last week that Eric T. Fresch, a former Vernon city attorney and city administrator who now serves as a $525-an-hour legal consultant, had made more than $1million for each of the last four years, including $1.65million 2008.

O’Callaghan and several other employees had earned $500,000 to $1 million a year during the same period, The Times reported.

The disclosure of Vernon’s outsized paychecks followed the news earlier this summer from Bell, Vernon’s working-class neighbor, that city administrator Robert Rizzo had reaped total annual compensation of more than $1.5 million. That report sparked public outrage among Bell residents, prompting the resignations of Rizzo and two other highly paid managers, and an effort to recall City Council members.

With fewer than 100 residents, many of them city employees living in city-owned homes, there has been no such public outcry in Vernon. The city is home to about 1,800 businesses that employ some 55,000 people.

Vernon officials have defended the salaries paid to Fresch, O’Callaghan and others as necessary to secure top executive talent for the city’s energy-related businesses, but said they had done away with the two-tiered pay structure.

On Wednesday, in an open letter to Vernon business owners, Whitworth stressed that “no employees of the city of Vernon are currently making the large salaries” reported by The Times. He also noted that the city is “committed to greater transparency,” in part by eliminating contracts allowing employees to bill hourly rates on top of base salaries.

“Vernon professionals are now either paid a flat city salary, or are hired solely as consultants,” he wrote.

In March the City Council voted to eliminate health and life insurance coverage for the children and spouses of city workers.

The city also ceased paying employees’ portions of CalPERS contributions.

O’Callaghan said at the time that Vernon needed to take “tough actions” to maintain its solid financial standing.