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In a small sauce pan, melt the butter and blend in flour. Let sit for a minute. Add all of cold milk, stirring with a whisk. Season with salt and cayenne.
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Cook the sauce on low until smooth and boiling, stirring occasionally with a whisk.
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Reduce the heat and stir in the cheese.
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Place a half of the sliced potatoes in a lightly greased one quart casserole dish.
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Pour half of the cheese sauce over the potatoes. Repeat with second layer of potatoes and cheese sauce.
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Sprinkle the remaining cheese on top. Top with some paprika for color.
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Bake uncovered for about 1 hour at 350°F.