To amend title XXI of the Social Security Act to provide for an exception to the reduction to State allotments under the Children's Health Insurance Program for fiscal year 2018.

State CHIP Flexibility Act of 2017 This bill establishes an exception to the requirement that unused Children's Health Insurance Program (CHIP) allotments to states for FY2017 be reduced by one-third. A state shall receive the exception if: (1) the remaining allotment amounts are with respect to expenditures incurred during any quarter of FY2017, (2) the state submitted a claim under its child health plan after September 30, 2017 and before December 31, 2017, and (3) the state could have alternatively submitted a claim for federal funding under its state Medicaid program.