Preheat oven to 325F.
Heat 3 tablespoons of butter in a saucepan over low heat until melted. Blend in flour, salt and pepper. Cook over low heat, stirring constantly, until mixture is smooth and bubbly. Gradually stir in the milk and the evaporated milk, 1/2 cup at a time. Heat to boiling. Boil and stir 1 minute.
I use my food processor's slicing blade to cut my potatoes and onions. I put two potatoes and a half onion in the feeding chute at one time, that way both get sliced and the onion is evenly distributed through the dish.
Arrange potatoes and onions in a greased 2 quart casserole in 3 layers, topping the first two layers with half the mushrooms and on third of the cheese and the sauce. Top the third layer of potatoes and onions with the cheese and the sauce.
Bake until potatoes are tender, about 60-70 minutes. Let stand 5 to 10 minute before serving.
