1. Short title This Act may be cited as the Emergency Financial Manager Reform Act of 2017 . 2. Findings The Congress finds the following: (1) Local government units are charged with providing critical law enforcement, educational training, public safety, and health services for the communities they serve. (2) The mismanagement of Federal grant money, including conflicts of interest and abuse of discretion, undermines the ability of local government units to provide these essential services. (3) The U.S. Government Accountability Office found that Federal grant management operations for local government units were adversely impacted in cases where unaccountable emergency financial managers were appointed. (4) The Federal Government has a strong interest in preventing the mismanagement of Federal funds intended to support local law enforcement efforts to protect health and safety by ensuring that local government units are accountable for such funds. (5) The appointment of an emergency financial manager may adversely impact voting rights when such appointment disproportionately affects minority communities whose local elected officials are displaced by such financial manager. (6) The appointment of an emergency financial manager can adversely impact public health and safety priorities, including the safety of public drinking water systems, in instances where they are unaccountable to local elected leaders. (7) Under article I, section 10, clause 1 of the U.S. Constitution, a State is prohibited from impairing a contractual obligation. In addition, some State constitutions explicitly prohibit impairment of a collective bargaining agreement and accrued financial benefits under a pension plan or a retirement system. Such impairment is unconstitutional and a violation of law unless consented to by all parties. 3. Safeguards regarding State appointment of an emergency financial manager (a) Reduction of Byrne-JAG funds The Attorney General may withhold 5 percent of the funds that would otherwise be allocated to a State