Since your question is tagged with "functional programming" following are functional solutions. Sure the program logic changes completely, but then your example code was imperative.
The basic principle of functional programming is that there is no state. What you're used to have as a shared state in imperative programming with all the headache involved (multithreading issues and etc.) - it is all achieved by passing immutable data as arguments in functional programming.
So, assuming the "state" data you wanted to pass was the current cycle number, here's how you'd implement a function using recursion:
def decorated ( a : String, cycle : Int ) : String
= if( cycle <= 0 ) a
else "I am decorated " + cycle + "x\n" + decorated(a, cycle - 1)
println(decorated("foo", 3))
Alternatively you could make your worker function non-recursive and "fold" it:
def decorated ( a : String, times : Int )
= "I am decorated " + times + "x\n" + a
println( (1 to 3).foldLeft("foo")(decorated) )
Both codes above will produce the following output:
I am decorated 3x
I am decorated 2x
I am decorated 1x
foo