Public pension plans are spending more than $2 billion a year in fees on high-cost, risky investments to boost returns. But those bets haven't been paying off, according a report Wednesday from the Pew Charitable Trusts.

The higher cost comes as public pension fund managers try to make up for a steep shortfall brought by years of underfunding and lackluster investment returns.

As of fiscal 2016, the latest data available, state pension funds tracked by Pew had a combined $1.4 trillion deficit – up $295 billion from 2015 and the 15th annual increase in pension debt since 2000. State public pension plans have assets of just $2.6 trillion to cover total pension liabilities of $4 trillion.

To try to make up that deficit, state pension fund managers have shifted investments away from the traditional mix of stocks and bonds to a greater reliance on alternative investments like hedge and private equity funds. Between 2006 and 2016, the average plan has raised its share of alternative investments from about 11 percent of assets to 26 percent.