In Dodge et al. v. Board of Education of Chicago et al., the U.S Supreme Court ruled in favor of the Board of Education, upholding a law that allowed for teachers' salaries to be reduced during times of financial distress. The plaintiffs, who were teachers in Chicago public schools, argued that their contracts with the school board guaranteed them fixed salaries and could not be altered without violating the Contract Clause (Article I, Section 10) which prohibits states from passing laws "impairing obligation of contracts". However, an Illinois statute permitted such reductions when necessary due to insufficient funds or decreased tax revenues. The court held that this was a valid exercise by state legislature under its police power and did not violate contract rights as it served a significant public purpose - maintaining functioning schools even amidst economic difficulties.

In the dissenting opinion for Dodge et al. v. Board of Education of Chicago et al., Justice Butler argued that the majority's decision violated property rights protected by due process under the Fourteenth Amendment. He contended that, as taxpayers and owners of bonds issued by a school district, plaintiffs had a legitimate claim to an interest in its financial management. The Illinois statute at issue allowed for tax levies without taxpayer approval to fund teachers' pensions, which Butler saw as an unconstitutional deprivation of property without due process because it did not provide sufficient safeguards against potential mismanagement or misuse of funds raised through such taxes. He also disagreed with the majority's interpretation that pension obligations were debts within meaning of state constitution’s debt limit provision; he believed they should be considered current expenses instead.