Senator Eliot Shapleigh - El Paso, Texas

Senator Steve Ogden, chair of the Senate Finance Committee, stands next to the state seal.

A pending lawsuit expected to cost the state millions — perhaps billions — of dollars threatens to prevent lawmakers from spending more on a range of services, the Senate's chief budget-writer said Tuesday.

The uncertainty could slow, or halt, efforts to increase spending on the Children's Health Insurance Program, college financial aid, pre-kindergarten and other programs.

"What the Legislature probably needs to do is to hold back some money and avoid expanding any discretionary programs until we get some guidance from the federal judge," Senate Finance Committee Chairman Steve Ogden, R-Bryan, said.

At issue is a case called Frew v. Hawkins, originally filed in 1993 by Texas mothers who said their children did not get the preventive health care that the federal government guarantees them under Medicaid, a federal-state program for low-income people.

In 1996, the state signed a consent decree agreeing to ensure that, among other things, families are aware of Medicaid services and that children in the program have timely access to checkups.

The families later sued, saying the state violated the decree, but the state argued that it was complying with federal law and that the agreement was not enforceable. The case made it to the U.S. Supreme Court, which ruled in 2004 in favor of the families. Later, the state attempted to dissolve the decree, but two courts rebuffed that effort, and in January the Supreme Court refused to hear the case.

U.S. District Judge William Wayne Justice has scheduled an April 9 hearing on the case. He is expected to prescribe steps that the state must take to comply with the decree. State officials didn't estimate how much that could cost.

The legislative session began less than two months ago with talk of record budget surpluses. The lurking Frew lawsuit, however, has changed that mood.

"Everybody's in this budget trying to basically expand CHIP. . . expand this, expand that," Ogden said. "I think prudence would dictate that we be very cautious about any expansion until we find out what our obligations are under mandatory programs, and we ought to hold some money back. No one thinks the opinion is going to be free."

He stopped short of saying the lawsuit will force lawmakers to reduce services.

But Rep. Sylvester Turner, D-Houston, said he worries that the state will respond to the lawsuit by spending money that would have gone to other health and human services programs.

"It is as if the people who are paying for it are the people who need the money in the first place," Turner said.

At stake in the Frew case is the health care of the 2 million Texas children now on Medicaid. "There's no way to pay these children back for the benefits they've lost," said Susan Zinn, the plaintiffs' lawyer.

Stephanie Goodman, a spokeswoman for the Health and Human Services Commission, said, "We're confident that care is available and accessible for the vast majority of children on Medicaid whose families are seeking services."

Rep. Dan Gattis, R-Georgetown, said lawmakers are working to address the underlying issues of the lawsuit — such as increasing Medicaid reimbursement rates for health care providers so that more of them will take Medicaid patients.

Zinn said there are other barriers for families. For example, the program is not adequately telling them which health care services they're entitled to, she said.

Gattis said how Texas is treating children and whether the state is living up to the agreement are separate issues.

"We had an attorney general who signed us into an agreement that many of us don't think that we should have been signed into," Gattis said.