Office of Administrative Hearings director warns of funding strain after drop in billable hours

Hope Hogan, director of the Office of Administrative Hearings, told the Senate Appropriations Committee that the office faces a budget challenge after a sustained drop in billable hours.

Hogan testified during a public hearing on Senate Bill 2017, which would appropriate funds to defray the office’s expenses. The Office of Administrative Hearings (OAH) is funded through fees it bills to state and local agencies and does not receive general fund dollars.

The office has seen caseload fluctuations and billing changes that reduced revenue even as some workloads remain steady. "We are completely funded through special funds," Hogan said, and added that "the decrease in hours presents a challenge for us." She told senators she recently raised the office’s hourly billing rate to try to respond to the revenue shortfall.

Hogan gave committee members a summary of caseload and performance metrics. OAH received 446 hearing requests in calendar year 2023 and 499 in 2024, a combined 945 requests for those two years; the prior two-year period (2021–22) had 768 requests. For the first 18 months of the current biennium she said the office received 720 requests from 26 agencies. Attachment summaries in her memo showed about 65% of hearing requests in 2023–24 went to hearing, down slightly from 66% in the prior two years. Pre-hearing conferences totaled 341 in 2023–24, down from 387 earlier. Hogan also said the office reduced average processing time for Workforce Safety and Insurance (WSI) cases from roughly 290 days to about 150 days since 2019, tracking toward a statutory target of 215 days.

Hogan described OAH’s staffing and structure. She said the prior director, Tim Dawson, retired Jan. 3, 2025; Hogan has been director for 10 days at the time of testimony. She said the office includes two other full‑time administrative law judges (ALJs) — Jessica Binder and one other full‑time ALJ — plus an office manager, Francis Zuther, and an administrative assistant, Louise Wetzel. The office also uses four part‑time contract ALJs, primarily for WSI cases, three in Fargo and one in Bismarck. Hogan said she does not plan to immediately refill Dawson’s position and expects the office to operate with four FTE if the vacancy is not filled.

Committee members pressed Hogan on billing and contracting. "I'm a little surprised that with the reduced amount of cases that you would need to increase the per hour fee when it seems like you could just have less contract attorneys or less contract hours," Senator Mathern asked. Hogan replied the rate and staffing mix were set after analysis and accountants examined billable hours versus the rate; she said the contract ALJs historically were in Fargo where much of the WSI work arises and that travel and regional availability affect costs and choices. She told the committee her office is trying to shift more work to permanent full‑time ALJs rather than contract ALJs.

Senators requested additional detail. Senator Davison asked for historical operating expense figures that show how much the office paid contract ALJs in prior years and for the contract rates and splits; Hogan said she would provide the history and that the office retains an administrative portion of the billed fee while paying a contracted share to the external ALJs (she estimated roughly an 80/20 split but said she did not have exact numbers in the hearing). Senators also asked for the office’s ending fund balance for recent years and for a breakdown of operating and IT costs; Hogan said she would provide that information.

Hogan described other cost‑reduction steps the office has taken: eliminating a Westlaw subscription, testing alternative research resources available through the Bar Association, discontinuing a transcription service called Logical, and increasing the use of video conferences and in‑house ALJs to reduce contractor travel costs. She said some of those choices reflect efficiencies gained by experienced ALJs and a change in hearing modality — remote hearings bill fewer travel hours — and that some types of hearings remain in person when credibility or complexity make that preferable.

Hogan also detailed the office’s statutory role and client mix: OAH handles hearings for a broad set of state agencies, including Department of Health and Human Services, Workforce Safety and Insurance, the Public Service Commission, Human Resource Management Services for personnel grievances, and multiple licensing boards; it occasionally handles local government hearings by request. She told the committee the office has provided hearings for more than 100 different state and local agencies over the years.

The committee did not take action on the bill at the hearing. Senators directed Hogan to provide follow‑up data requested during questioning — contract ALJ dollars and rates, ending fund balances for recent years, and an operating‑expense breakdown — and the committee set the item aside for later consideration.

Ending

Hogan closed by saying the office will continue seeking ways to increase revenue and reduce costs while maintaining accessibility: "We are always open to new areas where we could be of assistance to other agencies," she said, and added that she would provide the committee with the requested financial and contract details.