The sentence error rate is expected to be higher, because only sentences that are 100% right will count. With 38% WER you have a very small probability of getting everything right in an utterance.
With smaller data you need less parameters. I'm don't know what would work for you, probably a low amount of leaves (like 400), but with only one hours of data you should be able to try a lot of them and see what works best.
By the way, the tedlium corpus is free, and there is a recipe for it in Kaldi. I think it's about 150 hours, so it would give you already a decent system.