Texas, like many states across the country, is struggling with fiscal problems. With a budget shortfall that may exceed $10 billion, legislators are making difficult decisions about constraining costs and seeking innovative ways to protect the integrity of programs. Decisions about the Children’s Health Insurance Program (CHIP) pose one of the greatest challenges for the 78th Texas Legislature. Measures taken to control costs during this session will reshape health care for needy children, gauge legislative commitment to sound fiscal policy, and define the state’s commitment to strengthening families.