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The phrase "functioning state" is correct and usable in written English.
You can use it to refer to a government or a society that is functioning properly and effectively. For example: "Our goal is to create a society in which everyone has access to the resources they need to live in a safe and functioning state."
Exact(59)
It's been another week of uh-oh spaghetti ohs for Britain's barely functioning state and its entirely non-functioning leader.
The reconstruction of Haiti will need a legitimate, functioning state.
The end of Pakistan as a viable, functioning state?
Culpable negligence by the Bush administration left post-Saddam Iraq without a functioning state.
Their political philosophy menaces the functioning state on which political order depends.
We have put in place functioning state institutions including police and armed forces.
Syrians didn't decide out of the blue to destroy a properly functioning state.
Without a functioning state (in Libya, Yemen, Iraq) terrorists will behave opportunistically.
He is keener on building a functioning state than building a democracy.
Equally importantly, Nagorno-Karabakh's 140,000 Armenians have built a small but functioning state.
Similar(1)
Zwara's few functioning state-owned factories have ground to a halt.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com