The case of Jefferson et al. v. Hackney, Commissioner of Public Welfare, et al., 1971 revolved around the issue of welfare allocation in Texas. The plaintiffs argued that the state's method for distributing federal assistance was discriminatory and violated their rights under the Equal Protection Clause because it favored some recipients over others based on categorical distinctions (such as old age or disability). However, the Supreme Court ruled against them in a 5-3 decision. It held that there was no constitutional requirement for states to distribute funds equally among all categories of need; they could prioritize certain groups if they had rational reasons to do so. Furthermore, it found no evidence that Texas' system was designed with racial discrimination intent or effect.

In the dissenting opinion for Jefferson et al. v. Hackney, Justice Marshall argued that Texas' method of allocating welfare benefits was discriminatory and violated the Equal Protection Clause of the Fourteenth Amendment. He disagreed with the majority's view that states have broad discretion in determining how to distribute limited welfare resources, asserting instead that such discretion should not permit states to discriminate against certain categories of needy individuals. In his view, Texas' system unfairly disadvantaged families receiving Aid to Families with Dependent Children (AFDC) compared to those receiving other types of assistance by subjecting them to a more restrictive standard-of-need calculation and lower percentage reductions when funds were scarce. This approach disproportionately affected racial minorities who made up a significant portion of AFDC recipients, thus perpetuating racial discrimination under state law which is unconstitutional.