Preheat the oven to 350°F (176°C) and spray a 9x13 baking dish with nonstick cooking spray. Set the pan aside.

In a small saucepan, whisk together milk and cornstarch. Add the butter, salt, pepper, and paprika.

Heat the mixture over medium-low heat until it comes to a boil, whisking frequently.

Reduce the heat and allow to simmer for one minute, then remove from the heat and stir in 1 cup of cheese.

Now, place the frozen diced potatoes in a large bowl. Pour the cheese mixture over the potatoes and stir to mix.

Add the sour cream to the bowl and stir to combine all ingredients.

Pour the potato mixture into the prepared baking dish. Bake uncovered for 35 minutes.

When 10 minutes remain in the baking time, remove the casserole from the oven and sprinkle the remaining cheese over the top. Return the casserole to the oven and continue baking for the remaining 10 minutes.