Conventional wisdom dictates that you contribute savings to your 401k, at least to the level that maximizes your employer's match.

What if you decided not to because your employer might stop providing that matching amount (as several have done recently), and you might have to increase your savings rate to make up the difference?

This convoluted logic oozes from Austin these days. Gov. Rick Perry denounces federal stimulus checks as he reluctantly cashes them. Perry believes that the money represents profligate spending and that the state will be on the hook for programs and entitlements once the federal largess goes away in a couple of years.

In a letter to President Barack Obama, Perry wrote, "I remain opposed to using these funds to expand existing government programs, burdening the state with ongoing expenditures long after the funding has dried up."

More sensibly, House Speaker Joe Straus has appointed a Select Committee on Federal Economic Stabilization to develop recommendations on how the state can qualify for economic recovery funds. In early February, Straus and Lt. Gov. David Dewhurst asked state agencies to cut spending by 2.5 percent for the 2009 fiscal year but exempted Medicaid and the Children's Health Insurance Program.

Perry fancies himself the economic-development governor. But he seems to favor it only if it is a certain kind.

The federal recovery package includes an additional $5.3 billion in Medicaid funding. Before this allocation, the U.S. would send Texas $1.47 for every $1 it put into the program. The $5.3 billion requires no state matching funds and can, in fact, replace state revenue that is not forthcoming because of deteriorating economic conditions.

According to a 2008 report for the Kaiser Commission on Medicaid and the Uninsured, every 1 percent increase in the unemployment rate lowers state revenue by 3 to 4 percent. The Texas unemployment rose from 4.2 to 6 percent in 2008 and is projected to approach 8 percent by the end of 2009, a level of increase not seen in Texas since the 1980s.

The state Comptroller of Public Accounts has estimated that every nonstate dollar (from a federal or other out-of-state source) spent in Texas on healthcare generates $3.51 in overall spending. That's a powerful multiplier effect.

Unlike most other government sectors, state Medicaid funding pulls federal dollars into local economies to generate jobs and income. It also works the other way. A study by economist Ray Perryman estimated that for every $1 in state tax revenue cut from Medicaid and CHIP:

Local taxes go up 51 cents.

Local healthcare providers will have 53 cents of uncompensated care.

State tax revenue falls by 47 cents.

And $2.81 in federal funds is lost.

Since CHIP began during the Clinton administration, Texas has forfeited $958 million in federal aid because it did not fully fund its program. The federal government provides $2.52 for every state dollar invested in CHIP.

CHIP supporters found it ironic that the Legislature cut $200 million from the program in 2003, forgoing about $500 million in federal matching funds. Meanwhile, it added $295 million to Perry's vaunted Texas Enterprise Fund on speculation that it would help close deals with businesses looking to move to Texas.

To allay Perry's fear, the extra Medicaid money can be used simply to improve the existing program.

The state's rapidly growing unemployment rate will increase the caseload.

The funding could facilitate the enrollment of the uninsured 750,000 Texas children who already are eligible for Medicaid or CHIP. It would allow the state to increase the Medicaid enrollment period from six months to a year to match the CHIP enrollment guidelines. That move would cut the administrative workload in half and reduce hospitalizations and annual cost per child by 25 percent, according to studies in California and Texas.

Dewhurst has pledged strong support for enrolling eligible children in public insurance because morally it is the right thing to do, as well as sound fiscal policy to proactively prevent and treat disease early to avoid more expensive care later on.

He gets it.

Steve Jacob is publisher of the Star-Telegram /Arlington and Northeast Tarrant County. 817-685-3955