Preheat oven to 350 degree F. Butter six 12- to 16-ounce individual casserole dishes (or one 3-quart baking dish); set aside. In a 4-quart Dutch oven cook pasta according to package directions. Drain; return to pan. In a large saucepan cook onion and sweet pepper in butter over medium heat about 5 minutes or until tender. Stir in flour, salt, cilantro, and cumin. Add milk all at once. Cook and stir until mixture is thickened and bubbly. Reduce heat to low. Stir in colby cheese and 1 cup of the Monterey Jack cheese; stir until cheese is melted. Pour over drained pasta; stir to combine.
Layer half of the pasta mixture, all of the salsa, and the remaining pasta mixture in the prepared casseroles. Sprinkle with remaining 1/2 cup Monterey Jack cheese and olives. Sprinkle lightly with chili powder. Bake, uncovered, 15 to 20 minutes or until bubbly around edges and heated through. (If using large casserole, bake in a 400 degree F oven about 20 minutes.) Let stand 5 minutes before serving. Makes 6 servings.