Proliferation of smart grid technologies has enhanced observability and controllability of distribution systems. If coordinated with the transmission system, resources of both systems can be used more efficiently. This paper proposes a model to operate transmission and distribution systems in a coordinated manner. The proposed model is solved using a Surrogate Lagrangian Relaxation (SLR) approach. The computational performance of this approach is compared against existing methods (e.g. subgradient method). Finally, the usefulness of the proposed model and solution approach is demonstrated via numerical experiments on the illustrative example and IEEE benchmarks.