In the case of Bennett, Secretary of Education v. New Jersey (1984), the U.S. Supreme Court ruled in favor of William J. Bennett, then-Secretary of Education, over a dispute regarding federal funding for education under Title I of the Elementary and Secondary Education Act (ESEA) from 1970 to 1972. The State of New Jersey had used these funds for state-wide programs rather than specifically targeting them towards schools with high concentrations of low-income students as required by ESEA regulations at that time. When this was discovered during an audit years later, the Department demanded repayment from New Jersey which led to legal action being taken against it by Secretary Bennett. The court held that while there were indeed violations committed by New Jersey in their use and allocation of Title I funds during those years, they could not be held accountable due to a lack thereof clear notice about specific requirements on how such funds should have been spent at that time - thus ruling out any obligation on part for repayment.

In the dissenting opinion for Bennett, Secretary of Education v. New Jersey, Justice Brennan disagreed with the majority's interpretation of Title I of the Elementary and Secondary Education Act (ESEA). He argued that Congress intended to allow states flexibility in determining how to use federal funds under this program. The majority's decision would require states to repay any misused funds even if they had acted in good faith based on their understanding of ambiguous regulations. This could deter states from participating in federal programs due to fear of potential financial liability. Furthermore, he believed it was unfair for the Federal Government to retroactively apply new interpretations without giving adequate notice or opportunity for input from affected parties.