1. Heat oven to 350 F. Butter a 13 x 9 x 2-inch baking dish.
2. Bring a large pot of water to a boil. Add onions and cook for 10 minutes. Drain and spoon into prepared baking dish.
3. Meanwhile, melt butter in a medium-size saucepan. Whisk in flour, salt and pepper until smooth. Gradually whisk in the milk and bring to a boil. Boil for 1 minute, whisking constantly. Stir in cheese over low heat until cheese is melted.
4. Pour sauce over onions and stir to combine completely. Arrange bread cubes over mixture.
5. Bake at 350 F for 27 to 30 minutes or until bread is golden and onions are bubbling. Allow to stand for 10 minutes before serving. Garnish with chives, if desired. Do-Ahead Tip: If not serving right away, allow to cool completely. Cover and refrigerate for up to 2 days. To serve, bring to room temperature. Gently reheat at 325 F for 30 minutes or until internal temperature registers 150 F on an instant-read thermometer.