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.