MISHAWAKA – A northern Indiana city that paid $10,000 too much into a former city worker’s pension has reached a settlement under which the man will pay back $7,500.

But the South Bend Tribune reports that Mishawaka spent more than $12,500 in legal fees trying to get back the $10,000 it overpaid former Mishawka Utilities worker Pat Oliva.

Oliva had worked in maintenance for Mishawaka Utilities for seven years when he lost his job in 2009 in a staff reduction. In October 2011, the city released about $12,500 from its pension fund for Oliva, leaving him with about $10,000 after taxes.

Seven months later, however, auditors discovered that Oliva should have gotten only about $2,500 and sent him a letter asking for him to return the difference. But Oliva had already spent the money on bills at the downtown business he’d started, Oliva’s Bar & Restaurant.

Oliva, 53, refused to pay the money back and felt the city should absorb its mistake because his new business was still operating at a loss.

“I didn’t ask to be laid off,” he said. “It’s a sloppy job on their part.”

A lengthy exchange of letters between attorneys followed. After attempts at mediation, Oliva settled with the city about three weeks ago. He agreed to pay back $7,500, but it will cost him more than that because after an initial $2,000 payment, he’ll make monthly payments with interest.

Oliva said when he received notice of the pension he was surprised by the amount and wondered if it was a pre-tax figure. But then he received a statement in the mail confirming the pension.

“I figured they knew what they were doing,” he said.

Mishawaka’s staff attorney, Geoff Spiess, said the city spent $12,554 in legal fees.

City controller Yvonne Milligan said the pension error began when a city department mistakenly marked Oliva as fully invested in the pension fund.

His payout was calculated based on that.