It may sound a bit strange but it will work out mathematically if you follow the logic.  The bottom line is, it will be added back to Federal AGI even though it would appear as a subtraction on Sch CA (540).

On line 27 of Sch CA (540), that will end up as a negative number if there are no other subtractions.  That negative number will bypass Line 14 on F.540 and get added to Line 16 (as if it's part of the additions on Sch CA (540).