Cook potatoes in saucepan Cover with water and bring to boil Remove from heat and drain Transfer to a greased 2-quart baking dish While potatoes come to a boil make a white sauce by melting 3 tablespoons butter in saucepan Stir in flour salt and pepper Cook over low heat stirring constantly until mixture begins to bubble Remove from heat and slowly add milk stirring constantly Return to heat and bring to boil stirring When sauce is slightly thickened add cheese and stir until cheese is melted Pour cheese sauce over potatoes in baking dish Add ham and mix gently so as not to break up potatoes If desired combine 1 cup dry breadcrumbs and 2 tablespoons melted butter in small bowl and sprinkle over casserole Bake in preheated oven at 350 for 1 hour